May 18, 2021 — The Washington State Legislature passed HB 1091, legislation implementing a Clean Fuel Standard, on April 25^th. The state’s market-based program is modeled after California’s Low Carbon Fuel Standard (LCFS) and signals a growing trend we believe will spread to other states. Washington will likely become the third state to enact a low-carbon fuel requirement to decarbonize the transportation sector, after California and Oregon.

Washington state’s bill passed with just a 26–23 vote in the House and 54–43 in the Senate, despite apparent tensions between the chambers arising from what has been dubbed “poison pill” Senate amendments, changes proposed as non-negotiable and passed through the Senate on a 27–20 vote (with two members excused) and refused by the House. As a result, the chambers convened a conference committee lead by Senators Reuven Carlyle (D), Curtis King (R), and Mark Mullet (D), and House Representatives Mary Dye (R), Joe Fitzgibbon (D), and Vandana Slatter (D). They subsequently released a conference report, signed by the Democratic Conference Committee members (Sens. Carlyle and Mullet, Reps. Fitzgibbon and Slatter) and managed to pass the conferred legislation in both chambers. Governor Inslee, who has been a strong supporter of enacting a clean fuels standards, is attempting to veto some provisions of the bill tying it to infrastructure spending, a move that is likely to face legal challenges.

While the implementation of Washington’s Clean Fuels Standard is not as straightforward as Oregon’s, the conference committee meaningfully reduced some of the obstacles contained in the Senate version of the bill. As a result, we believe a Clean Fuels Standard will take effect in Washington in the near term. A summary of the changes resulting from the Conference Committee can be found below.

Changes to Washington’s Clean Fuel Standard Bill Following Conference Committee

While we view Washington as the state most likely to pass LCFS legislation in 2021, we believe LCFS-like programs will proliferate at the state level in the coming years. Both Minnesota and New Mexico introduced LCFS bills in this year’s legislative session, and Democratic leaders in New York, Illinois, and Colorado have expressed support for LCFS-like programs, with stakeholders expecting more progress toward implementation of an LCFS in the coming years.

For more information on Capstone’s outlook for state and federal decarbonization efforts, contact [email protected].