Washington Legislature Considers Clean-Fuels Standard as Part of Climate Change 'Grand Bargain'


For the past three years, tanker trucks filled with livestock tallow and vegetable oil have unloaded at the BP Cherry Point refinery in northwest Washington.

There, they are turned into renewable fuel that performs the same as diesel processed from North American crude oil.

This is the kind of stuff that could help Gov. Jay Inslee realize his vision of greening the state's transportation fleet. But the fuel, about 5% of the plant's total diesel output, heads south to Oregon and California, where state laws require marketers — including BP — to lower the carbon emissions from their products.

For more than half a decade, Inslee and his allies in the Legislature have tried unsuccessfully to pass similar legislation, which would offer a big array of incentives to develop transportation fuels that emit less greenhouse gas, and require the purchase of credits by fuel marketers that do not meet those standards.

The goal is to use progressively cleaner fuels in cars, trucks, boats, trains and aircraft that in Washington generate more than 44% of total carbon emissions. Those fuels could include electricity.

In the weeks ahead, the coalition will have another opportunity to succeed in its quest as the state Senate considers clean-fuels legislation (House Bill 1091) that already has cleared the state House of Representatives.

In the Senate, its fate may be tied to movement of a broader package of legislation that some are calling a "grand bargain." If passed it would give Inslee greenhouse-gas policies that have eluded him in his first two terms in office.

This could include a separate Senate bill that puts a broader price on the state's carbon emissions through a cap-and-trade system that would require steep reductions in state greenhouse gases and generate revenue through a trading system of pollution allowances. Another part of the negotiations involves long-term funding for state transportation projects.

"I am committed to a comprehensive package and I believe we have the votes to pass it," said state Sen. Reuven Carlyle, D-Seattle, who introduced the cap-and-trade legislation (Senate Bill 5126) and chairs the Senate Energy, Environment and Technology Committee, which is considering the House clean-fuels bill.

BP backs legislation

Passing a transportation funding and climate-change package may be a stretch.

This winter session unfolds amid a pandemic that commands center stage for legislators and has reduced in-person meetings that can help facilitate deal-making. And opponents who have rallied to block past legislative attempts, and helped bring log-truck drivers to Olympia last year to protest, are active again.

But the prospects for such an agreement are improved by new political fault lines dividing the oil industry.

BP was part of a united front of oil companies that opposed Washington clean-fuels legislation, also known as a low-carbon fuel standard. These lobbying efforts have been spearheaded by the Western States Petroleum Association, whose representative — Jessica Spiegel — in January testimony in the House denounced the 2021 clean-fuels bills as a "costly and ineffective mandate" to reduce carbon emissions.

But last year BP withdrew from the Western States Petroleum Association after announcing a blueprint for a corporate future that attempts to reach net-zero carbon emissions in 2050, and a 50% reduction in the carbon intensity of BP products also by that date.

The company also pledged "more active advocacy" for government policies to reduce carbon emissions.

In Washington, BP has offered "full-throated support" for the statewide cap and carbon pricing legislation, according to Tom Wolf, BP's West Coast senior governmental affairs manager.

BP is officially neutral on the clean-fuels bill, but Wolf said the company will "not lift a finger" to try to block it, and will work with legislators to try to make the "best possible" bill.

"We have net-zero goals within the company. To get there, we are going to need government programs that incentivize innovation throughout the market," Wolf said. "A lot of conservatives aren't quite there yet in terms of the need for it, but that doesn't mean I'm not talking to them."

Legislative wrangling

In the Senate, the Transportation Committee chair, state Sen. Steve Hobbs, D-Lake Stevens, is expected to be a key player as negotiations unfold.

Hobbs seeks passage of legislation — dubbed "Forward Washington" — that calls for an ambitious 10-year plan to invest in major transportation-environmental projects, including a range of road and bridge projects and culverts required under court order to improve salmon passage. The package called for $18.7 billion to be spent over 16 years, though Hobbs says the figures are "a moving target." Some of the funding for the investment would come from putting a price on carbon pollution.

Hobbs is a longtime skeptic of the clean-fuels legislation, and a previous version of the bill died last year in his committee.

This year, Hobbs said he "still is not supportive" of a clean-fuels bill. He questions the effectiveness of the policy to reduce carbon emissions and whether it is needed if carbon pricing is put in place. But he said that "doesn't mean things can't change," and it's possible that language could be added to the bill to address his concerns.

Clean-fuels proponents say that in California, both clean-fuels and cap-and-trade legislation are in place, and that they work together to help drive technological innovation resulting in major new investments and jobs.

Last August, for example, Phillips 66 announced plans to convert an entire refinery in Rodeo, California, from producing fuels from crude oil to producing renewable fuels from cooking oil, fats, greases and soybean oil.

Under the California law, the "carbon intensity" of the fuels is assessed based on the pollution released while producing them, which for crops includes fossil fuels involved in growing them.

Also in California, due to the clean-fuels law, businesses can invest in electric vehicles and charging stations that then generate credits. Those credits can be sold to fuel marketers who need them to stay in compliance. Amazon, which has announced plans to acquire over time 100,000 electric delivery vehicles, on Monday sent a letter to Inslee in support of the state Senate passing the clean-fuels bill, according to email correspondence from Kara Hurst, Amazon's vice president of worldwide sustainability.

There are also opportunities to produce new generations of aviation fuels as well as those for maritime fleets, and the prospects for reducing this pollution has given the legislation the strong backing of the Port of Seattle.

"We're not picking the fuels. We are setting the direction for how much carbon they can emit and letting the market — and technology — figure out how what is most cost effective," said state Rep. Joe Fitzgibbon, D-Seattle, who introduced the clean-fuels bill in the House.

At the Cherry Point refinery, BP officials say they are drawing renewable diesel fuel feedstocks from a broad area of the West. They include some in-state sources, such as Tyson Fresh Meats in Wallula. The end product can be used to entirely replace standard diesel fuel, and has about a quarter of the carbon footprint, according to BP officials.

If the clean-fuels bill does pass this session, BP officials expect some of the Cherry Point renewable fuel production would be shifted to Washington markets, but it's unclear whether production would increase.

"We put this project in place. It's worked out well for us. We're looking to do more to grow our footprint in the clean-fuels space," said Keith Archambault, BP's products optimization manager for the company's West Coast businesses.