Governor's Climate Report Estimates Low-Carbon Fuel Standard Would Add $1.17 Per Gallon
According to The Seattle Times, Governor Inslee is upset at a Republican claim that a Low-Carbon Fuel Standard (LCFS) would increase the price of a gallon of gas by $1. Recently, some have expressed concern that the Governor will impose an LCFS using an executive order.
In a letter to legislators, the Governor said "I don’t understand your contention that ‘my proposal’ will cost anything, let alone in excess of a dollar per gallon." He argues that without a specific proposal, it is impossible to estimate the cost of an LCFS.
That claim, however, ignores the report the Governor and other members of the Climate Legislative and Executive Workgroup (CLEW) received just three months ago as part of that process.
That report was required by law to provide an estimate of the cost to reduce one ton of CO2 emissions for a number of policies. It estimated an LCFS would cost between $103-$131 to avoid one ton of CO2 emissions. According to the EPA, that would equal up to $1.17 per gallon (one gallon of gasoline emits 0.9% of a metric ton of CO2, or 1/112th of a metric ton).
Ironically, those are the same numbers Governor Inslee and the Democrats indicated they used to choose their policies, including an LCFS. Last month, they wrote "Based on the information reviewed by the Workgroup, we believe these policies are the most cost effective tools we have available to meet our state emission limits."
It is important to note that other estimates of the cost of an LCFS are even higher. For example, the National Bureau of Economic Research indicated the cost may be much higher, in the range of $307 to $2,272 per ton. This would amount to an additional $3 to $22 per gallon.
In his letter, the Governor also objected to calling the LCFS a "tax." According to The Seattle Times, he wrote:
I have never proposed, nor discussed proposing, a “carbon fuel tax.” I have discussed a low carbon fuel standard as a mechanism to develop cleaner fuels for our state. There is no element of a clean fuels standard that could in any way be called a tax.
This is simply a semantic debate. Currently, biofuels enjoy a $1 per gallon subsidy from the federal government. Rather than paying $1 more at the pump, taxpayers pay higher taxes elsewhere and the money is routed to biofuel companies. Whether it is a direct or indirect tax, ultimately taxpayers will pay more to meet an LCFS.
If the Governor believes the numbers in the CLEW report are incorrect, he can make that argument. It doesn't seem unreasonable, however, to cite the CLEW estimates when the Governor himself vouched for them as the basis for his policy suggestions.