MOUNT VERNON — A new draft of the state’s Clean Air Rule that could put carbon-capping regulations on the two oil refineries in Skagit County is on track to be finalized by September.
The state Department of Ecology rule would require stationary sources that emit more than 100,000 metric tons of carbon a year to reduce their emissions by 1.7 percent each year.
That means industries such as the Shell Puget Sound and Tesoro Anacortes refineries on March Point would have to find ways to reduce emissions or face up to a $10,000 fine per day under the federal Clean Air Act, Ecology spokeswoman Camille St. Onge said.
Carbon dioxide, a gas emitted when fossil fuels such as coal, oil and natural gas are burned, is one of the greenhouse gases scientists have determined contribute to climate change. It is the most largely emitted of seven greenhouse gases the Clean Air Rule would regulate.
The rule is part of a state effort to curb Earth-warming emissions by applying regulatory standards to natural gas distributors, petroleum producers and other stationary sources of carbon emissions.
The rule, first introduced in January, was withdrawn in February to address issues brought by potentially affected industries.
Concerns raised about the rule early this year centered on protecting business growth and crediting businesses for past efforts to reduce emissions, Ecology officials said during a news conference June 1.
An updated version of the rule was released June 1 and is open for public comment until July 22.
The updated Clean Air Rule includes specific requirements for energy-intensive and trade-exposed industries, such as aluminum smelters and steel mills. Ecology defines those industries as those that face significant global competition and use a large amount of energy to manufacture products.
Those businesses would have to reduce emissions based on their annual production, annual emissions and their efficiency compared to competitors.
If the rule is finished by September, as Ecology plans, the carbon cap will apply in 2017 to 24 facilities in the state that emit more than 100,000 metric tons of carbon emissions per year, including the March Point refineries and Cascade Natural Gas, which has a facility in Mount Vernon.
Uncertainty for industries
Some are concerned about how the rule could affect the targeted industries.
Cascade Natural Gas could see higher costs of business due to the rule, company conservation policy manager Allison Spektor said, which could mean high costs passed to customers.
Cascade Natural Gas spokesman Mark Hanson said he fears that could disproportionately burden low-income families.
“It’s important to keep that disparity in mind when formulating environmental policy,” Hanson said.
Western States Petroleum Association spokesman Frank Holmes said the association has concerns about how quickly the rule is being developed. The association represents petroleum-based industries including the March Point refineries.
“Normally in a rule-making (process) like this, you would have direction from the Legislature on what they would like to see, and then it would move forward into rule making that would take a couple of years,” Holmes said. “None of that has happened in this rule. This was done by directive, and they are trying to rush it through way faster than any rule making we’ve seen of this complexity.”
It is unclear if the rule will affect Shell’s proposal to build a rail offloading facility to receive shipments of Bakken crude oil by train from North Dakota or Tesoro’s proposal to extract more xylene from crude oil during the refining process to ship to Asia.
Tesoro refinery spokesman Matt Gill said the company is reviewing the latest version of the rule and may submit comments while it’s open for public input.
He said the refinery’s first priority is protecting its workers.
“Any policies or laws that jeopardize our local workforce without providing viable alternatives with comparable wages should be of great concern to all the residents of Skagit County,” Gill said.
Meanwhile, the refinery strives to operate as efficiently as possible, which reduces on-site emissions, he said.
Shell Oil Co., which operates the Shell Puget Sound Refinery, is waiting for the official rule to be set before taking a stance on it, spokesman Ray Fisher said. But in general, the company supports efforts to curb carbon emissions.
“Shell is in favor of an international price on carbon and other market-based mechanisms to reduce CO2 emissions,” Fisher said.
Under the Clean Air Rule, the 100,000 metric ton threshold will drop by 5,000 metric ton increments every three years until it is 70,000 metric tons in 2035. By then, Ecology estimates the rule would apply to about 70 facilities.
As the threshold drops, Puget Sound Energy’s Fredonia Generating Station in Skagit County may be affected by the rule, according to Ecology documents.
Puget Sound Energy spokeswoman Akiko Oda said the utility is studying the rule and the impact it may have.
A focus on stationary sources
The incremental reduction of the carbon threshold is meant to help the state meet Gov. Jay Inslee’s goal of reducing emissions to 25 percent lower than 1990 levels by 2035.
Ecology climate policy specialist Sarah Rees said the Clean Air Rule covers two-thirds of emissions in the state and is expected to save the state $14.5 billion in climate change-related costs.
“Given the magnitude of climate change, we cannot wait any longer to take action,” she said.
Last year, the Shell Puget Sound Refinery and Tesoro Anacortes Refinery emitted 2,049,448 tons and 1,333,624 tons of carbon emissions respectively, according to Northwest Clean Air Agency data.
Those refineries, combined with two other oil refineries in Whatcom County, contribute 7 percent of the state’s carbon emissions, according to a 2012 Department of Ecology report.
Transportation is the single largest source of emissions in the state, accounting for about 46 percent, according to Ecology data. But that sector is more difficult to regulate.
“We can’t tell people to not drive,” Ecology’s St. Onge said during a public webinar April 27. “We need to find emission reductions.”
Under the Clean Air Rule, reducing emissions will be required, but affected businesses have some options for how to make reductions happen.
A business can invest in facility improvements on site or use a variety of carbon trading or off-site emission reduction projects.
Ecology’s Clark said the rule will allow companies to buy and sell credits for reducing or preventing carbon emissions.
Each metric ton of carbon emissions – which is about the equivalent of emissions produced by driving from Seattle to Houston, according to the U.S. Environmental Protection Agency – will be considered an emissions reduction unit. Those units will be banked “like a savings account of carbon reductions,” Clark said.
In addition to the Clean Air Rule, Washington voters will see a proposed carbon tax on the ballot in November, called I-732.
A carbon tax puts a price on each ton of greenhouse gasses emitted, according to the Union of Concerned Scientists. This approach to reducing carbon emissions encourages consumers to reduce fuel consumption and businesses to work toward creating cleaner technology.
Tesoro’s Gill said if the Clean Air Rule and carbon tax both take effect in Washington, the refinery and other affected industries will be double regulated.
“Complex issues like regulating carbon emissions need to be fully examined and debated to ensure complete transparency and disclosure of all the associated costs and benefits,” he said.
An investment opportunity
For some organizations that specialize in energy efficiency improvements, the Clean Air Rule is good news.
Jeff Aslan, energy program director at the nonprofit Sustainable Connections, works with businesses in Whatcom, Skagit and San Juan counties to make their facilities more energy efficient.
As the organization completes efficiency projects in the region, it could sell the emissions credits to be used in the Clean Air Rule banking system, or industries such as the Shell and Tesoro refineries could get credit toward the Clean Air Rule requirements by investing in those types of programs.
“This plan could be a new source of revenue for us,” Aslan said.
Aslan said conservation and efficiency programs such as Sustainable Connection’s not only have environmental benefits, but can also stimulate the local economy as more contractors are hired to complete projects.
Efficiency projects include changing out appliances, replacing infrastructure and installing solar panels.
Sustainable Connections has 26 projects – either completed or in progress – with businesses in Skagit County.
Those projects save the businesses a collective $9,120 in energy use each year, Aslan said. They also reduced carbon emissions by 8.9 metric tons.
“There is a direct community benefit,” he said. “Conservation is the best way to curb carbon emissions. If you save energy at the source, there are system-wide benefits for everyone.”
Efficiency is a key solution to reducing carbon emissions for businesses and individuals, said Katie Skipper, spokeswoman for the Northwest Clean Air Agency, which monitors and regulates emissions in Skagit, Island and Whatcom counties.
“The best way to reduce greenhouse emissions is by being as efficient as possible,” she said. “If you drive a car that doesn’t get good fuel mileage or your house is inefficient, then your carbon footprint is going to be much larger.”
As large, carbon-emitting industries look to meet coming Clean Air Rule standards, they could invest more into local programs such as Sustainable Connections.
Aslan said he thinks Ecology is moving in the right direction.
“Pricing carbon is the key policy that ties together other emission reduction programs,” he said. “… It puts a price on pollution that used to be free.”
A need for change
Sasha Pollack, who studies climate and clean energy policy at Western Environmental Council, said the Clean Air Rule is a unique approach to battling climate change.
She said it’s promising that the rule would encourage investments in emissions reductions and clean energy projects.
“Because we need to move so quickly (to battle climate change), it’s always good to have revenue generated,” she said. “We live in a system based on markets. We should pay for the things that we want more of, charge for what we don’t want.”
Pollack said that a transition off of fossil fuels will be a large one, but the importance of it extends outside this state.
“It matters because we know climate change is happening now. We’re seeing ocean acidification, species die off, wildfire. Agriculture seasons are changing,” she said. “The things that are making Washington ‘Washington’ are changing, and that’s because of the amount of carbon we are putting in the atmosphere.”
For now, the focus on reducing carbon emissions is largely on big, industrial polluters. But they are only a starting point in a larger issue, Skipper said.
“It’s easy to point to businesses as the problem because you can see them, and we regulate them, and they don’t move,” she said. “Our agency focuses on bringing carbon emissions down at refineries because we have regulatory authority at those businesses. This is a big problem that is going to take a big solution.”
