‘Top off in WA but do not fuel’: trucking org skeptical of carbon tax exemption

(The Center Square) – Certain industry sectors are supposed to be exempt from any fuel surcharges fuel companies pass along to customers due to Washington state’s cap-and-trade program, but that hasn’t always been the case in practice.

Last week, Joel Creswell – the Washington State Department of Ecology’s climate pollution reduction program manager – touted progress regarding exempting certain industries from paying a fuel tax based on the state’s carbon emission auctions.

“So, we’ve really made significant progress on the exempt fuels issue,” he told the Senate Environment, Energy & Technology Committee on Oct. 9.

According to the Department of Agriculture, certain types of fuel or categories of fuel usage in the agriculture, maritime and aviation sectors are exempt from the fuel surcharge.

The Center Square reached out to various organizations to get their take on Creswell’s assessment.

Washington Trucking Association President and CEO Sheri Call was less sanguine about implementation of the fuel tax exemption.

“It’s definitely more rosy than in reality, and it still doesn’t take into consideration the complex nature of the trucking industry and multiple things that our members do, so I’m still disappointed, honestly,” Call said of Creswell’s assessment. “The work group didn’t really produce much of anything.”

She was referencing a series of summer stakeholder meetings initiated by the Department of Ecology’s Exempt Fuel Work Group.

Call said small carriers – mentioning a two-truck operation in eastern Washington – are being hit especially hard, noting that not all of them have “a direct line of sight to covered entities.”

She went on to say, “So, they’re not going to make a 50-mile round trip out of their way to buy fuel from a supplier who has offered this exemption.”

Small carriers are struggling, she explained.

“For those small carriers who have no choice, they’re trying to fuel as efficiently and cheaply as they can,” she said.

Call mentioned some dollar figures to bring home the impact of the fuel surcharge.

“This two truck operation – to them, it’s a $20,000 to $25,000 additional cost to fuel a year, and that’s just one story,” Call said. “I have people who are spending $20,000 to $25,000 a month on fuel because of the surcharge. So, it’s still significant. People are still hurting. and it’s, honestly, it’s a really bad time.”

The current state of the economy isn’t helping, she lamented.

“So for us to be suffering with the highest or second-highest fuel prices in the nation right now when the economy is doing so poorly, especially for freight, it’s just a bad combination,” Call said. “It’s a terrible thing to be doing business in Washington. But I’m hearing from carriers who, because of the economic situation, they’re basically instructing their drivers to top off in Washington but do not fuel.”

Still, she hasn’t given up hope that the situation will be resolved, noting the Department of Ecology needs “to take a deeper dive into the trucking industry and figure out how they might be able to make us whole in terms of the ag exemption. Hopefully, there will be more conversations coming.”

BP’s take was more positive, noting that in the first quarter of 2023 it developed an exempt fuel process that meets the Department of Ecology’s standards.

The British multinational oil and gas company headquartered in London provided some more details, including fuel distributor customers being offered accounts that exempt CCA compliance costs for the appropriate end-users and rebating compliance costs on exempt fuels going back to Jan. 1 for customers who have paperwork confirming exempted fuels. The goal is to complete that process by the end of the year.

The exempt fuel program is available to fuel distributor customers and their immediate end users, according to BP, but is not available where fuel is resold multiple times and the company cannot confirm an exempt end-use as required by the Department of Ecology.

“BP continues to support Washington state’s Climate Commitment Act, which aligns with our global net zero ambition,” a BP spokesperson emailed The Center Square. “We have worked with our customers and the Department of Ecology to address uncertainty around how regulated entities can verify exemptions that apply to targeted fuels used by marine and agricultural customers.”

Washington’s cap-and-trade law involves polluters buying allowances at state-run auctions to offset their carbon emissions. The money raised – more than $1.4 billion so far – is meant to go to programs to fight climate change and improve the environment.