Low-carbon fuel mandate wastes more than 9 out of every 10 dollars
Last week, the legislature heard a proposal to mandate a low-carbon fuel standard (LCFS) in Washington state, which is designed to reduce transportation-related CO2 emissions.
Oregon and California have already adopted a similar rule, and their experience demonstrates that an LCFS has high costs both for consumers and for those who care about reducing CO2 emissions effectively. My one-minute testimony outlined, quickly, these two concerns.
I misspoke, saying that some claimed the cost of the LCFS was “one percent.” The claim by some, including Governor Inslee, is that it costs only one cent per gallon. As I noted, this number is from Oregon in 2018, and the cost has more than doubled in one year. Oregon still has only implemented 15 percent of the requirement and as it reaches 100 percent of the target in 2025, the costs will continue to rise. At this rate it is expected to cost at least 16 cents per gallon when it is fully implemented.
Senator Ericksen asked a question about what would happen if Washington increased the requirement for renewable fuels on top of the requirement in California and Oregon. As I noted, the price would go up even further. Despite the increase in demand in California and Oregon, production capacity has not expanded.
Finally, Senator Fortunato asked a question about the impact of the LCFS on jobs. Some have claimed the LCFS would increase the number of jobs in the state. Similar claims were made when the state adopted a 10 percent ethanol requirement. Those jobs did not materialize. As I noted in my answer to Senator Fortunado, the analysis shows the LCFS isn’t likely to create new jobs either.
As I mentioned in my opening statement, there are places we can invest to reduce CO2 emissions for a fraction of the price the LCFS would cost.