1091-S3 AMH PAUL H1130.1

3SHB 1091 - H AMD 117

By Representative Paul

On page 8, line 39, after "program" insert ".

"(c) The department shall harmonize the program's cost containment mechanisms with the cost containment rules in the states specified in section 7(1) of this act.

(d) The department shall consider mechanisms such as the establishment of a credit price cap or other alternative cost containment measures if deemed necessary to harmonize market credit costs with those in the states specified in section 7(1) of this act"

On page 10, line 11, after "requirements." insert "The department must apply the same baseline years to credits associated with electric or alternative transportation infrastructure that apply to gasoline and diesel liquid fuels in any market-based program enacted by the legislature that establishes a cap on greenhouse gas emissions."

On page 10, line 20, after "(ii)" strike "Refinery investments in" and insert "Project-based refinery greenhouse gas mitigation including, but not limited to, process improvements, renewable hydrogen use, and"

On page 11, line 7, after "requirements" insert "and methods for credit generation"

On page 11, after line 22, insert the following:

"(3) The department must conduct a biennial review of innovative technologies and pathways that reduce carbon and increase credit generation opportunities and must modify rules or guidance as needed to maintain stable credit markets."

On page 14, after line 37, insert the following:

"NEW SECTION. Sec. 12. (1) The department must issue an order declaring an emergency deferral:

(a) No later than 15 calendar days after the date that the department determines that:

(i) There is a known shortage of a fuel or low carbon fuel that is needed for regulated parties to comply with the carbon intensity standard established under section 3 of this act; and

(ii) The magnitude of the shortage of that fuel is greater than the equivalent of five percent of the amount of the fuel forecasted to be available during the effective compliance period; or

(b) Immediately upon the issuance by the governor of a proclamation, executive order, or directive pursuant to declaring an energy emergency under chapter 43.21G RCW due to a shortage of gasoline or diesel.

(2) An order declaring an emergency deferral under this section must set forth:

(a) The duration of the emergency deferral;

(b) The types of fuel to which the emergency deferral applies; and

(c) Which of the following methods the department has selected for deferring compliance with the scheduled applicable carbon intensity standard during the emergency deferral:

(i) Temporarily adjusting the scheduled applicable carbon intensity standard to a standard identified in the order that better reflects the availability of credits during the emergency deferral and requiring regulated parties to comply with the temporary standard;

(ii) Allowing for the carryover of deficits accrued during the emergency deferral into one or more future compliance periods without penalty; or

(iii) Suspending deficit accrual during the emergency deferral period.

(3)(a) In implementing an emergency deferral, the department may take an action for deferring compliance with the carbon intensity standard other than, or in addition to, selecting a method under subsection (2)(c) of this section only if the department determines that none of the methods under subsection (2)(c) of this section will provide a sufficient mechanism for containing the costs of compliance with the carbon intensity standards during the emergency deferral.

(b) If the department makes the determination specified in (a) of this subsection, the department shall:

(i) Include in the order declaring an emergency deferral the determination and the action to be taken; and

(ii) Provide written notification and justification of the determination and the action to:

(A) The governor;

(B) The president of the senate;

(D) The appropriate committees of the house of representatives and the senate.

(4)(a) Except as provided in (b) of this subsection, the duration of an emergency deferral:

(i) Implemented using the method described in subsection (2)(c)(i) of this section may not be less than one calendar quarter; and

(ii) Implemented using a method described in subsection (2)(c)(ii) or (iii) or (3) of this section may not be less than 30 calendar days.

(b) An emergency deferral may not continue past the end of the compliance period during which the emergency deferral is issued.

(c) The department may terminate an emergency deferral prior to the expiration date of the emergency deferral only if new information becomes available indicating that the shortage for which the emergency deferral was issued has ended. Termination of an emergency deferral is effective 15 calendar days after the date that the order declaring the termination is adopted."

Renumber the remaining sections consecutively and correct any internal references accordingly.

EFFECT: (1) Requires the cost containment mechanisms in the Clean Fuels Program (CFP) rules adopted by the Department of Ecology (Ecology) be harmonized with the cost containment mechanism of other states with similar clean fuels program requirements and which supply to or receive from Washington significant quantities of transportation fuel.

(2) Requires Ecology to consider a credit price cap or other cost containment measures if necessary, to harmonize market credit costs with other states with similar clean fuels program requirements and which supply to or receive from Washington significant quantities of transportation fuel.

(3) Requires Ecology's CFP rules to apply the same baseline years for electric and alternative transportation infrastructure that apply to gasoline and diesel liquid fuels in any enacted market-based programs that establish a cap on greenhouse gas emissions.

(4) Authorizes Ecology's CFP rules to allow credits for project-based refinery mitigation other than carbon capture and sequestration, including through process improvements or renewable hydrogen use.

(5) Requires Ecology's CFP rules to seek to harmonize credit generation methods with those of other states with similar clean fuels program requirements and which supply to or receive from Washington significant quantities of transportation fuel.

(6) Requires Ecology to conduct a biennial review of innovative technologies and pathways to reduce carbon and generate credits, and to modify rules or guidance as needed to maintain stable credit markets.

(7) Requires Ecology to issue an emergency deferral of the CFP in the event of a low carbon fuel shortage of at least 5 percent of the amount forecasted to be available during the effective compliance period, or upon the issuance of a Governor's declaration of an energy emergency under existing statutory processes. Requires Ecology emergency deferral orders to specify the duration of the deferral, the type of applicable fuel, and the applicable methods for deferring compliance with CFP requirements, which may include temporary adjustments to the carbon intensity standard, the carryover of deficits accrued during an emergency deferral, or a suspension of deficit accrual. Requires emergency deferrals to last no less than either 30 days or a calendar quarter, depending on the type of emergency deferral ordered by Ecology. Provides processes for Ecology to terminate an emergency deferral prior to its scheduled expiration.