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 and $131 to reduce one ton of CO2 emissions. According to the U.S. Environmental Protection Agency, 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 who are members of CLEW said 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 indicates 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 his LCFS proposal a “tax”. According toThe 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, bio-fuels 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 bio-fuel companies. Whether it is a direct or indirect tax, ultimately taxpayers will pay more to meet the governor’s proposed LCFS tax.
The governor claimed he would never support an LCFS with such a high cost. He could reduce the overall cost of his LCFS by easing the carbon-reduction requirement. The trade-off, however, is that such a move would also reduce the environmental effectiveness of an LCFS. This is the inherent problem with the governor choosing a high-cost policy approach. To make this approach work, he must make it very expensive or, to keep costs low, he must make it much less effective.
If Governor Inslee 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.