Z-0180.1
SENATE BILL 5231
State of Washington 67th Legislature 2021 Regular Session
By Senators Stanford, Saldaña, Billig, Carlyle, Das, Frockt, Hunt,
Keiser, Kuderer, Liias, Lovelett, Nguyen, Nobles, Pedersen, Robinson,
Salomon, and Wilson, C.; by request of Office of the Governor
Read first time 01/15/21. Referred to Committee on Environment,
Energy & Technology.
1 AN ACT Relating to reducing greenhouse gas emissions by reducing
2 the carbon intensity of transportation fuel; amending RCW 46.25.100,
3 46.20.202, 46.25.052, 46.25.060, 70A.15.3150, 70A.15.3160,
4 19.112.110, and 19.112.120; adding a new chapter to Title 70A RCW;
5 prescribing penalties; and providing an expiration date.
6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
7 NEW SECTION. Sec. 1. (1) The legislature finds that rapid
8 innovations in low carbon transportation technologies, including
9 electric vehicles and clean transportation fuels, are at the
10 threshold of widespread commercial deployment. In order to help
11 prompt the use of clean fuels, other states have successfully
12 implemented programs that reduce the carbon intensity of their
13 transportation fuels. California and Oregon have both implemented low
14 carbon fuel standards that are similar to the program created in this
15 act; after enacting their programs, neither state has experienced
16 disruptions to fuel markets or significant impacts to the costs of
17 transportation fuels, and both states have experienced biofuel sector
18 growth and have successfully sited large biofuel projects that had
19 originally been planned for Washington. Washington state has
20 extensively studied the potential impact of a clean fuels program,
21 and most projections show that a low carbon fuel standard would
p. 1 SB 5231
 1 decrease greenhouse gas and conventional air pollutant emissions,
2 while positively impacting the state's economy.
3 (2) The legislature further finds that the health and welfare of
4 the people of the state of Washington is threatened by the prospect
5 of crumbling or swamped coastlines, rising water, and more intense
6 forest fires caused by higher temperatures and related droughts, all
7 of which are intensified and made more frequent by the volume of
8 greenhouse gas emissions. As of 2017, the transportation sector
9 contributes 45 percent of Washington's greenhouse gas emissions, and
10 the legislature's interest in the life cycle of the fuels used in the
11 state arises from a concern for the effects of the production and use
12 of these fuels on Washington's environment and public health,
13 including its air quality, snowpack, and coastline.
14 (3) Therefore, it is the intent of the legislature to support the
15 deployment of clean transportation fuel technologies through a
16 carefully designed program that reduces the carbon intensity of fuel
17 used in Washington, in order to:
18 (a) Reduce levels of conventional air pollutants from diesel and
19 gasoline that are harmful to public health;
20 (b) Reduce greenhouse gas emissions associated with
21 transportation fuels, which are the state's largest source of
22 greenhouse gas emissions; and
23 (c) Create jobs and spur economic development based on innovative
24 clean fuel technologies.
25 NEW SECTION. Sec. 2. The definitions in this section apply
26 throughout this chapter unless the context clearly indicates
27 otherwise.
28 (1) "Carbon dioxide equivalents" has the same meaning as defined
29 in RCW 70A.45.010.
30 (2) "Carbon intensity" means the quantity of life-cycle
31 greenhouse gas emissions, per unit of fuel energy, expressed in grams
32 of carbon dioxide equivalent per megajoule (gCO2e/MJ).
33 (3) "Clean fuels program" means the requirements established
34 under this chapter.
35 (4) "Cost" means an expense connected to the manufacture,
36 distribution, or other aspects of the provision of a transportation
37 fuel product.
38 (5) "Credit" means a unit of measure generated when a
39 transportation fuel with a carbon intensity that is less than the
p. 2 SB 5231
 1 applicable standard adopted by the department under section 3 of this
2 act is produced, imported, or dispensed for use in Washington, such
3 that one credit is equal to one metric ton of carbon dioxide
4 equivalents.
5 (6) "Deficit" means a unit of measure generated when a
6 transportation fuel with a carbon intensity that is greater than the
7 applicable standard adopted by the department under section 3 of this
8 act is produced, imported, or dispensed for use in Washington, such
9 that one deficit is equal to one metric ton of carbon dioxide
10 equivalents.
11 (7) "Department" means the department of ecology.
12 (8) "Electric utility" means a consumer-owned utility or
13 investor-owned utility, as those terms are defined in RCW 19.29A.010.
14 (9) "Greenhouse gas" has the same meaning as defined in RCW
15 70A.45.010.
16 (10) "Military tactical vehicle" means a motor vehicle owned by
17 the United States department of defense or the United States military
18 services and that is used in combat, combat support, combat service
19 support, tactical or relief operations, or training for such
20 operations.
21 (11) "Motor vehicle" has the same meaning as defined in RCW
22 46.04.320.
23 (12) "Price" means the amount of payment or compensation provided
24 as consideration for a specified quantity of transportation fuel by a
25 consumer or end user of the transportation fuel.
26 (13)(a) "Tactical support equipment" means equipment using a
27 portable engine, including turbines, that meets military
28 specifications, owned by the United States military services or its
29 allies, and that is used in combat, combat support, combat service
30 support, tactical or relief operations, or training for such
31 operations.
32 (b) "Tactical support equipment" includes, but is not limited to,
33 engines associated with portable generators, aircraft start carts,
34 heaters, and lighting carts.
35 (14) "Transportation fuel" means electricity and any liquid or
36 gaseous fuel sold, supplied, offered for sale, or used for the
37 propulsion of a motor vehicle or that is intended for use for
38 transportation purposes.
p. 3 SB 5231
 1 NEW SECTION. Sec. 3. (1) The department shall adopt rules that
2 establish standards that reduce carbon intensity in transportation
3 fuels used in Washington. The standards established by the rules must
4 be based on the carbon intensity of gasoline and gasoline substitutes
5 and the carbon intensity of diesel and diesel substitutes.
6 (2)(a) The rules adopted under this section must reduce the
7 greenhouse gas emissions attributable to each unit of the fuels to 10
8 percent below 2017 levels by 2028 and 20 percent below 2017 levels by
9 2035.
10 (b) The rules must establish a start date for the clean fuels
11 program of no later than January 1, 2023.
12 (c) By December 31, 2031, the department must adopt updated rules
13 that reduce the greenhouse gas emissions attributable to each unit of
14 transportation fuels applicable to each year through 2050. The
15 department must adopt rules that set the greenhouse gas emissions
16 attributable to each unit of transportation fuel in the year 2050 so
17 that total emissions from transportation sources in 2050 are
18 consistent with the state achieving the emissions limits established
19 in RCW 70A.45.020.
20 (3)(a) Transportation fuels exported from Washington are not
21 subject to the greenhouse gas emissions reduction requirements in
22 this section.
23 (b) Electricity is not subject to the greenhouse gas emissions
24 reduction requirements in this section.
25 (4) To the extent the requirements of this chapter conflict with
26 the requirements of chapter 19.112 RCW, the requirements of this
27 chapter prevail.
28 NEW SECTION. Sec. 4. The rules adopted by the department to
29 achieve the greenhouse gas emissions reductions per unit of fuel
30 energy specified in section 3 of this act must include, but are not
31 limited to, the following:
32 (1) Standards for greenhouse gas emissions attributable to the
33 transportation fuels throughout their life cycles, including but not
34 limited to emissions from the production, storage, transportation,
35 and combustion of transportation fuels and from changes in land use
36 associated with transportation fuels and any permanent greenhouse gas
37 sequestration activities.
38 (a) The rules adopted by the department under this subsection (1)
39 may:
p. 4 SB 5231
 1 (i) Include provisions to address the efficiency of a fuel as
2 used in a powertrain as compared to a reference fuel;
3 (ii) Consider carbon intensity calculations for transportation
4 fuels developed by national laboratories or used by similar programs
5 in other states; and
6 (iii) Consider changes in land use and any permanent greenhouse
7 gas sequestration activities associated with the production of any
8 type of transportation fuel.
9 (b) The rules adopted by the department under this subsection (1)
10 must:
11 (i) Neutrally consider the life-cycle emissions associated with
12 transportation fuels with respect to the political jurisdiction in
13 which the fuels originated and may not discriminate against fuels on
14 the basis of having originated in another state or jurisdiction.
15 Nothing in this subsection may be construed to prohibit inclusion or
16 assessment of emissions related to fuel production, storage,
17 transportation, or combustion or associated changes in land use in
18 determining the carbon intensity of a fuel;
19 (ii) Measure greenhouse gas emissions associated with electricity
20 based on a mix of generation resources specific to each electric
21 utility participating in the clean fuels program. The department may
22 apply an asset-controlling supplier emission factor certified or
23 approved by a similar program to reduce the greenhouse gas emissions
24 associated with transportation fuels in another state; and
25 (iii) Include procedures for setting and adjusting the amounts of
26 greenhouse gas emissions per unit of fuel energy that is assigned to
27 transportation fuels under this subsection.
28 (c) If the department determines that it is necessary for
29 purposes of accurately measuring greenhouse gas emissions associated
30 with transportation fuels, the department may require transportation
31 fuel suppliers to submit data or information to be used for purposes
32 of calculating greenhouse gas emissions that is different from or
33 additional to the greenhouse gas emissions data reported under RCW
34 70A.15.2200(5)(a)(iii).
35 (d) If the department determines that it is necessary for
36 purposes of accurately measuring greenhouse gas emissions associated
37 with electricity supplied to retail customers by an electric utility,
38 the department may require electric utilities participating in the
39 clean fuels program to submit data or information to be used for
40 purposes of calculating greenhouse gas emissions that is different
p. 5 SB 5231
 1 from or additional to the fuel mix disclosure information submitted
2 under chapter 19.29A RCW. To the extent practicable, rules adopted by
3 the department may allow data requested of utilities to be submitted
4 in a form and manner consistent with other required state or federal
5 data submissions;
6 (2) Provisions allowing for the achievement of limits on the
7 greenhouse gas emissions intensity of transportation fuels in section
8 3 of this act to be achieved by any combination of credit generating
9 activities capable of meeting such standards, consistent with the
10 limitations of subsection (3)(a) of this section. Where such
11 provisions would not produce results counter to the emission
12 reduction goals of the program or prove administratively burdensome
13 for the department, the rules should provide each participant in the
14 clean fuels program with the opportunity to demonstrate appropriate
15 carbon intensity values taking into account both emissions from
16 production facilities and elsewhere in the production cycle,
17 including changes in land use and permanent greenhouse gas
18 sequestration activities;
19 (3)(a) Methods for assigning compliance obligations and methods
20 for tracking tradable credits. The department may assign the
21 generation of a credit when a fuel with associated life-cycle
22 greenhouse gas emissions that are lower than the applicable per-unit
23 standard adopted by the department under section 3 of this act is
24 produced, imported, or dispensed for use in Washington, or when
25 specified activities are undertaken that support the reduction of
26 greenhouse gas emissions associated with transportation in
27 Washington. Transportation fuels with associated greenhouse gas
28 emissions exceeding 80 percent of the 2017 levels established in
29 section 3 of this act are not eligible to generate credits under the
30 clean fuels program;
31 (b) Mechanisms that allow credits to be traded and to be banked
32 for future compliance periods; and
33 (c) Procedures for verifying the validity of credits and deficits
34 generated under the clean fuels program;
35 (4) Mechanisms to elect to participate in the clean fuels program
36 for persons associated with the supply chains of transportation fuels
37 that are eligible to generate credits consistent with subsection (3)
38 of this section, including producers, importers, distributors, users,
39 or retailers of such fuels;
p. 6 SB 5231
 1 (5) Mechanisms for persons associated with the supply chains of
2 transportation fuels that are used for purposes that are exempt from
3 the clean fuels program compliance obligations, including but not
4 limited to electricity and fuels used by aircraft, vessels, railroad
5 locomotives, and other exempt fuels specified in section 5 of this
6 act, to elect to participate in the clean fuels program by earning
7 credits for the production, import, distribution, use, or retail of
8 exempt fuels with associated life-cycle greenhouse gas emissions
9 lower than the per-unit standard established in section 3 of this
10 act;
11 (6) Cost containment mechanisms.
12 (a) Cost containment mechanisms may include, but are not limited
13 to:
14 (i) A credit clearance market designed to make credits available
15 for sale to regulated persons after the conclusion of a compliance
16 period at a department-determined price;
17 (ii) Similar procedures that provide a means of compliance with
18 the clean fuels program requirements in the event that a regulated
19 person has not been able to acquire sufficient volumes of credits at
20 the end of a compliance period; or
21 (iii) Similar procedures that ensure that credit prices do not
22 significantly exceed credit prices in other jurisdictions that have
23 adopted similar programs to reduce the carbon intensity of
24 transportation fuels.
25 (b) Any cost containment mechanisms must be designed to provide
26 financial disincentive for regulated persons to rely on the cost
27 containment mechanism for purposes of program compliance instead of
28 seeking to generate or acquire sufficient credits under the program;
29 (7) Authority for the department to designate an entity to
30 aggregate and use unclaimed credits associated with persons that
31 elect not to participate in the clean fuels program under subsection
32 (4) of this section.
33 NEW SECTION. Sec. 5. (1) The rules adopted under sections 3 and
34 4 of this act must include exemptions for, at minimum, the following
35 transportation fuels:
36 (a) Fuels used in volumes below thresholds adopted by the
37 department;
38 (b) Fuels used for the propulsion of all aircraft, vessels, and
39 railroad locomotives; and
p. 7 SB 5231
 1 (c) Fuels used for the operation of military tactical vehicles
2 and tactical support equipment.
3 (2)(a) The rules adopted under sections 3 and 4 of this act must
4 exempt the following transportation fuels from greenhouse gas
5 emission intensity reduction requirements until January 1, 2028:
6 (i) Special fuel used off-road in vehicles used primarily to
7 transport logs;
8 (ii) Dyed special fuel used in vehicles that are not designed
9 primarily to transport persons or property, that are not designed to
10 be primarily operated on highways, and that are used primarily for
11 construction work including, but not limited to, mining and timber
12 harvest operations; and
13 (iii) Dyed special fuel used for agricultural purposes exempt
14 from chapter 82.38 RCW.
15 (b) Prior to January 1, 2028, fuels identified in this subsection
16 (2) are eligible to generate credits, consistent with subsection (5)
17 of this section. Beginning January 1, 2028, the fuels identified in
18 this subsection (2) are subject to the greenhouse gas emission
19 intensity reduction requirem