Imposes a tax on the taxable income of each petroleum business for the privilege of engaging in any business activity within this state and provides for the administration of the tax.

Requires the department of general administration to administer a grant program for state agencies and school districts to provide funds for the construction of energy conservation projects.

Requires the department of commerce, in consultation with the joint committee on energy supply and energy conservation, to administer a business renewable energy grant program to allocate funds to Washington businesses that invest in renewable energy sources.

Creates the energy and transportation reserve account.

Prescribes penalties.