The Washington State Climate Commitment Act was passed by the Washington Legislature in 2021 and took effect on January 1st, 2023. This program caps carbon emissions in Washington state and requires producers of carbon emissions to purchase allowances equivalent to their greenhouse gas emissions during a quarterly auction. The cost of these credits are reflected in your fuel purchases and any other purchases you make that involve greenhouse gas emissions. Examples of other greenhouse gas emissions covered under this program include natural gas utilities, electric utilities, transportation infrastructure (including goods transported via highway, rail, or water), and solid waste utilities (trash pickup/landfills).
CAR stands for Cap at Rack and refers to the estimated cost of compliance with the Climate Commitment Act and associated "cap and trade" regulations. The Climate Commitment Act requires carbon emitters to purchase credits for their emissions at a market-based auction. For each metric ton of carbon emitted, one credit must be purchased. At the first auction in February 2023, each credit sold for $48.50. There is a secondary market for those credits where prices change daily. The price of those credits reached a high of over $70 following the first auction. Total credits available will decrease in future years, resulting in an anticipated increase in cost.
One gallon of gasoline emits 8,887 grams of CO2 while one gallon of diesel emits 10,180 grams of CO2. One metric ton contains 1,000,000 grams, meaning at $70 per credit (metric ton) an additional cost of approximately 71 cents per gallon of diesel and 62 cents per gallon of non-ethanol gasoline is created.
In addition to the CAR fee, the Washington State Legislature approved a Clean Fuel Standard or Low Carbon Fuel Standard (LCFS). The LCFS is separate from and in addition to the CAR fee. The LCFS aims to reduce the carbon intensity of fuels to 20% below 2017 levels by 2034 through a combination of replacing traditional fuels with alternatives (such as biofuels) and requiring traditional fuel generators to purchase credits generated by alternative fuel producers.
In 2023, traditional fuel suppliers will pay a flat fee of $50,649 to support the program in addition to between 2 and 3 cents per gallon of fuel produced. This fee will increase every year until reaching a high in 2033 of an estimated 30 cents per gallon.
The CAR and LCFS fees are reflected in consumer fuel prices.
Exemptions exist for both the CAR and LCFS fee. To determine if you are exempt from the CAR fee, please review page 1 of the "WA Dept Ecology Exemption" form. To determine if you are exempt from the LCFS fee, please review the "LCFS Exemptions" form - permanently exempt entities and entities exempt through 2027 can be found on page 4.
If you qualify for an exemption from the CAR fee, please complete the "WA Dept Ecology Exemption" form. If you qualify for an exemption from the LCFS fee, please complete the "Dept. of Rev Sales Tax Exemption" form. If you purchase fuel from CO-Energy owned cardlocks that qualifies for an exemption, please fill out the appropriate cardlock exemption form ("Cardlock AG Transport Exemption" or "Cardlock Ag Exemption"). All forms can be found at the link below. If you have any questions on the forms, please reach out to your sales representative or call our office at 509-547-3326.
Yes! If you are exempt from the CCA fees and purchased fuel which included those fees at any point in 2023, we will reimburse that cost. Please complete the “CCA Rebate Form”. Once received, we will confirm that all other necessary paperwork is complete and process your rebate on the next monthly statement.
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