Low carbon fuel standard could be costly to farmers

By Diana Carlen
WAWG Lobbyist

During the 2020 Legislative Session, state lawmakers are once again considering adopting a low carbon fuel standard (LCFS) for transportation fuels. A top priority of Gov. Inslee’s, LCFS legislation passed the House last year, but stalled in the Senate. 

 Aimed at reducing greenhouse gas emissions, a LCFS would require fuel suppliers to reduce the carbon “intensity” of gasoline and diesel fuels by blending them with increasing amounts of biofuels or by purchasing compliance “credits” from suppliers of lower carbon transportation fuels. Only two states in the country have this standard—California, and more recently, Oregon.

HB 1110 and SB 5412 would direct the Washington State Department of Ecology to develop a statewide LCFS with the goal of reducing the carbon intensity of transportation fuels by 10 percent by 2028 and 20 percent by 2035. 

 A similar but more aggressive fuel standard has also been proposed by the Puget Sound Clean Air Agency (PSCAA) for King, Kitsap, Pierce and Snohomish counties. 

 Whether statewide or regional, an LCFS would have costly implications. In California, the LCFS is adding about 19 cents per gallon to the cost of gasoline, which is projected to increase to 63 cents per gallon by 2030. Oregon’s LCFS has had limited impact because of its early stage of implementation, but is on track to duplicate or even exceed California’s fuel cost impacts. 

 In Washington, a study commissioned by the PSCAA found that its regional LCFS could add up to 57 cents per gallon to the cost of gasoline and up to 63 cents per gallon to diesel fuel by 2030. 

In a recent hearing before the Senate Environment, Energy and Technology Committee, Washington farmers informed lawmakers that as price-takers, farms would have limited ability to recoup transportation cost increases attributed to the LCFS. The added costs of transporting crops to market would have to be absorbed, which would put Washington farms at a competitive disadvantage compared to those in other states and countries. 

 Fortunately, the proposed statewide LCFS would exempt fuels used to operate off-road farm equipment—at least until 2028. Even so, farmers at the hearing expressed concerns about the use of ethanol blends that are corrosive and can clog pumps and filters and cause damage to fuel lines, seals, gaskets and injectors. Such problems could be exacerbated over time with increased biofuel blending as the LCFS becomes more stringent. 

 LCFS proponents claim the LCFS would benefit Washington corn and wheat growers as local crops could be used to produce ethanol in the state. However, according to the study commissioned by PSCAA, “these crops are unlikely to be developed as a resource for low carbon transportation fuel production in Washington. While the volumes of these feedstocks are substantial, there are significant hurdles to constructing new ethanol production facilities.” 

 Most existing ethanol production facilities in the country are in the Midwest, where the concentration of low-carbon feedstocks is greater, giving them a competitive advantage over any potential new facilities that could be built in Washington. 

 Overall, the proposed LCFS would be high cost with little to no benefit. While the goal of the LCFS is to reduce greenhouse gas emissions, PSCAA’s own study did not even address the potential impacts on climate change emissions. In terms of air quality, the study modeled only one pollutant and found the LCFS would have minimal impact. 

 WAWG supports carbon reduction policies that recognize agricultural practices as a benefit to the environment, complement existing policies, do not impose inefficient costs on Washington agriculture and do not make wheat growers less competitive in the global market. The LCFS policy would not meet any of those criteria.