On July 22nd, 2016 the Washington Business Alliance submitted comments to the Washington State Department of Ecology regarding their draft Clean Air Rule. Our comments were created in collaboration with stakeholders guided by the intention of charting a productive course on carbon reduction.

Late last week Ecology released its response to all the submitted comments, including those from the Business Alliance. Below, you’ll find Ecology’s responses along with a breif summary of the relevant comment.

Business Alliance comment #1

CAR should leverage forestry assets to generate Emission Reduction Units. Washington State can leverage its substantial forestry assets to sequester carbon through enhanced forest management practices and advanced wood products. Forestry activities that result in improved forest management are eligible to generate credits under the California Cap-and-Trade Compliance Offset Program.

Ecology Response

Ecology strongly supports addressing climate change through all the means available to Washingtonians. That includes sequestration activities. However, by definition, sequestration into trees and soils, or into geological formations, is not an emission reduction. It is the temporary removal of carbon dioxide from the atmosphere. The CAR is focused on real, permanent emission reductions and, as such, does not include sequestration activities in the menu of options available to demonstrate that real, permanent emission reductions have been achieved.

Note that emission reduction projects in the agricultural sector are included in the rule, such as those from methane management and from certain soil fertilizer management practices that reduce nitrous oxide emissions. In general, Ecology has taken a broad viewpoint on emission reductions so as to include these types of activities. But, as noted, sequestration activities are not emission reductions.

As with other aspects of this rule, Ecology has the ability to reexamine this focus on emission reductions, rather than emission removals, in the future.

Business Alliance comment #2

Excluding carbon sequestration is a missed opportunity. This is particularly true for rural natural resource based economies.

Ecology Response

It is unclear to Ecology whether there is scientific consensus as to whether an additional 100 gtC must be sequestered through reforestation and soil protection measures globally, and if so, whether the appropriate share for Washington is the 9.4 million metric tons of CO2e per year cited by the commenter. However, as stated in our Response 1, Ecology must balance multiple considerations in developing rules, including economic impacts, and is not restricted solely to scientific considerations. Further, as we point out in our Response 84, the CAR is not the sole policy to address climate change in Washington. Finally, mandating levels of reforestation, sequestration, and soil protection likely falls outside Ecology’s authority under the Washington CAA, and is outside the scope of the CAR.

One commenter argues that Ecology’s Concentrated Animal Feeding Operation (“CAFO”) permit is insufficient to accomplish soil sequestration. The CAFO permit is aimed at protecting state waters from discharges of pollutants arising from CAFO operations. The permit is issued under Ecology’s authority to implement the federal Clean Water Act and the state Water Pollution Control Act. The comment period for the CAFO permit closed on August 31, 2016. That permit is beyond the scope of the CAR.

Business Alliance comment #3

Need consistency across Emission Reduction Unit compliance categories. The types of activities that are eligible to generate ERUs should be made as consistent as possible across the three compliance categories: allowances, in-state ERU generating activities, and on-site projects.

Ecology Response

Thank you for your comment.

Business Alliance comments #4-5

Need to include reasonably ascertainable upstream/downstream benefits. Substantial upstream or downstream benefits should be accounted for. In our view this assumption is based on an implicit and logical life-cycle basis that does not require a rigorous life-cycle analysis. Likewise other technologies can show similar upstream or downstream benefits.

Need to include displaced benefits (e.g., advanced wood products). Categorically ruling out upstream or downstream benefits is not consistent with the protocols referenced in the rule. For example, the Improved Efficiency of Vehicle Fleets protocol from the American Carbon Registry calculates credit based on the displacement benefit of one type of technology (a more efficient vehicle) over another (less efficient vehicle that is no longer in use).

Ecology Response

The CAR establishes emission standards for GHGs for direct emissions within the state. It does not look at lifecycle emissions or the carbon footprint of the manufacture of products as those emissions are not direct emissions within Washington State.

Ecology acknowledges that certain products can contribute to overall lower GHG emissions on a global basis (e.g., silicon for solar panels or aluminum components to lightweight aircraft). However, it is difficult to quantify the actual emissions reduced from using those products, or whether emissions were in fact reduced. Therefore Ecology has concluded that the direct emissions approach in the CAR is the appropriate mechanism for achieving emission reductions.

Business Alliance comment #6

Need to establish a concrete, defensible threshold for permanence. An arbitrary permanence standard of “irrevocable and nonreversible” is not a realistic measurement for compliance or enforcement. Adopting a standard shared among jurisdictions (i.e., 100 years in California) will better integrate Washington's system with the broader marketplace.

Ecology Response

Some commenters suggest that Ecology use a definition for permanence that does not require emission reductions to be permanent, i.e., that allows for the possibility of a reversal in which the emission reduction is re-emitted at some point in time. Ecology is aware that some GHG reduction programs do craft a definition for permanence that does not require the emission reduction to be permanent. However, in light of the exclusion of sequestration as a compliance option in the CAR, the most logical definition for permanence is the most literal use of the term. Therefore, the definition is based on the concept that the emission reduction is non-reversible.

Business Alliance comment #7

Need to establish process to identify/certify new ERU generation protocols. Ecology should establish a technology-neutral process to identify and certify new protocols as Emission Reduction Unit generating activities.

Ecology Responses
  1. Numerous commenters make requests for a wide variety of projects, programs, or other types of emission reduction activities that are not explicitly listed in the rule with a protocol or process. There is nothing in the rule that would prevent emission reduction projects or programs that fall under the broad categories listed (e.g., energy, transportation, industrial, waste, livestock and agricultural) from being approved through a variety of methods. Those include:
    • The addition of new protocols over time. As new protocols are developed, either through the applicable registries (e.g., American Carbon Registry) or through other means, they can be added to the rule through rulemaking. Note that Ecology also has the ability to add new registry protocols to the rule (e.g., the Verified Carbon Standard is beginning to branch out and incorporate project types that may mirror those allowed by the CAR).
    • Independent Qualified Organization (IQOs), which are providers of emission reductions recognized by EFSEC and which have historically provided emission reductions for the Washington carbon dioxide mitigation standard for new power plants, are allowed more flexibility in the rule to provide emission reductions through a variety of means.
    • The general category of “Ecology approved emission reductions” provides a mechanism to potentially capture a wide variety of different emission reduction pathways. Guidance on how this category would or could work will be forthcoming as part of the implementation guidance for the rule.
    • It is the hope and expectation that more protocols, with more specificity for Washington, can be incorporated into the CAR rule over time. That process will take time but, as noted above, there are other avenues to bring in emission reductions without protocols in the meantime.
    • Changes to the rule language were made to clarify that Ecology intends to allow emission reductions from any approved version of an emission reduction protocol to be able to generate ERUs, up to the protocol date noted in the rule. So it is now clear that older protocols used to generate emission reductions can be used to generate ERUs, and not just the most recent version of any given protocol. Because of legal limitations against incorporating future versions of protocols that do not yet exist into rules, the rule will need to be updated to modify that date and ensure that emission reductions from projects using the most recent version of protocols can qualify, and that is Ecology’s intent in the future.
  2. Ecology agrees that the manner in which offset protocols, or the general methodologies by which emission reductions will be incorporated into the program, should be done in a public manner with significant public involvement. Ecology intends to adopt future protocols into the rule through the formal rulemaking process, which will guarantee extensive public input and all of the considerable guarantees of public involvement that the Washington rulemaking process puts into place. It is possible that in the future Ecology may, by rule, put in place an alternative process that provides the same level of opportunity for public input and engagement but can move more nimbly based on the core foundation in the CAR for emission reductions a wide variety of project and program types.

Business Alliance comment #8

CAR should ensure benchmarking doesn’t make compliance harder for Energy-Intensive Trade-Exposed industries (EITEs). We urge Ecology to ensure that the new benchmarking approach does not inadvertently create a more onerous compliance pathway for any individual EITE than is required for any non-EITE. 

Ecology Response

We believe that the emission reductions for an average efficiency EITE party will be similar to what would have been required were it to be a non-EITE party.

Top performing EITEs will have lesser reduction requirements making it easier to comply. The least efficient EITE covered parties will have to reduce their GHG emissions at a faster rate. This requirement is to encourage the below average performer to improve its efficiency to become more competitive and reduce emissions. Below-average performers have more opportunities to reduce emissions and reduce emission intensity than the above average performers in its sector. This should tend to make their products more cost competitive over time.

Reduction requirements are also production dependent for EITE covered parties. EITEs with increased production relative to their baseline period will benefit from the EITE process.

Mass-based GHG emission limits will be lower for situations where production has decreased relative to the baseline period. This may be a temporary or permanent condition for a given source. However, their limits on an efficiency basis would remain consistent. This adjustment is symmetrical to the adjustment for growing sources and necessary to maintain overall reductions. This also reduces the risk of leakage by removing an incentive to move production out of state.

Ecology has changed the rule to give EITE covered parties the choice to opt-out of the EITE pathway if they think the mass-based approach is preferable.

Next Steps

This Business Alliance is disappointed with Ecology's responses which do not grant the meaningful concessions we had hoped for in regard to our concerns and suggestions. This speaks to the need for stronger business engagement as the process moves forward.

We will continue to forcefully communicate these points to Ecology and the Legislature. The Business Alliance worked with some of the state’s largest industries and leading scientists to facilitate input. We’ve lead the charge for a better understanding of the role that different industries and technologies play in carbon emissions and sequestration. The ideas we presented are strong and we will continue working to ensure they are integrated into the final outcome of carbon reduction efforts.

 

Click here to see Ecology's responses to all of the comments on the draft Clean Air Rule.