Climate consultant refutes cost assumption

Staff writerMarch 7, 2014 

A consultant to Gov. Jay Inslee’s bipartisan work group on climate change is disputing Republican and oil-industry claims that a clean-fuels standard in Washington could tack $1 or more to the cost of a gallon of gasoline.

In a memo dated Feb. 3 but made public this week by Inslee’s office, staffers with the Leidos consulting firm said actual effects on Washington fuel prices would be far lower. The firm estimated they would be in the range of 6 cents to 8 cents per gallon if Washington moved, as California has, to phase in a 10 percent mix of ethanol in fuel stocks.

Leidos outlined an alternative scenario costing 4 to 6 cents. In that scenario, low-carbon ethanol would immediately start replacing high-carbon ethanol from corn rather than displacing gasoline or diesel.

Both scenarios undermine Senate Republicans’ claim that Inslee’s proposed low-carbon fuel standard would be so pricey as to risk passage of a gasoline tax increase to fund transportation projects.

GOP leaders in the House and Senate have urged the governor to renounce the standard, claiming again this week that it would raise gasoline prices at the pump by potentially $1 per gallon — if not more.

Leidos staffers calculated an estimated cost last month after seeing their earlier work misconstrued.

“Leidos has never calculated a cost per gallon value for a Washington LCFS to date,” staffers Tim Kidman and Christina Waldron of Leidos wrote in their one-page memo to the Climate Legislative and Executive Workgroup, or CLEW.

They went on to say that “recent reports in the media misrepresent the cost” by misinterpreting Leidos data that dealt with a carbon tax rather than a clean-fuels standard.

“The result overestimates the per gallon cost by approximately one order of magnitude,” the consultants said. In other words, the reports were off by a factor of 10 times.

CLEW was formed at Inslee’s behest to identify ways to reduce the state’s greenhouse gas emissions and meet emission-reduction targets set into law several years ago. Without new action, Washington’s won’t meet its targets.

Unable to get bipartisan agreement in CLEW for the state’s next step, Inslee is weighing how best to take executive action. He also is apparently still interested in working with the Legislature, although he said “the Senate is still under the thrall of climate deniers,” which he said makes it hard to pass climate legislation.

Inslee reiterated Thursday he does not intend to move ahead with any proposal that would have a large, negative effect on the state’s economy.

“I think everybody needs to take a deep breath on this and not get their knickers in a twist quite yet,” the Democrat told reporters.

Some Senate majority coalition leaders, including Senate Transportation Committee co-chair Curtis King, R-Yakima, continue to claim costs of up to $1.18 a gallon. King inserted language into his latest proposed transportation package asserting a $1 cost and urging Inslee not to move ahead.

Republican Sen. Doug Ericksen of Ferndale, who was on Inslee’s climate work group, said the key is that “we don’t know what the cost of this low carbon fuel standard would be.”

“There are multiple studies showing multiple results. It depends on how you cook your assumptions,” he said in an interview.

For proof that costs of a low-carbon fuel standard could top $1 a gallon, Ericksen cited the Boston Consulting Group report done for the West Coast oil industry’s trade group two years ago. University of California-Davis researchers later reviewed the study and found it flawed.

Ericksen also cited a 2010 report by Charles River Associates done for another oil-industry advocacy group. Charles River, a Washington, D.C.-based firm, predicted a 30 percent cost increase for transportation fuels by 2020 if a nationwide fuel standard was adopted and a 90 percent increase by 2025.

Todd Myers, an energy analyst for the free-market Washington Policy Center in Seattle, said the 10 percent fuel mix cited in the Leidos memo would cost pennies on a gallon, but more than Leidos estimated. Myers said a range of 9 to 11.5 cents a gallon is a safer bet.

But a 10 percent mix wouldn’t get Inslee where he wants to go, Myers said. To reduce emissions enough to reach targets in state law for 2020, the governor would need to propose a complete shift to biofuels – which Myers said could cost $1 a gallon.

Brad Shannon: 360-753-1688 bshannon@theolympian.com

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