May Newsletter
Washington biofuel bills passage signals first Harvesting Clean Energy Action Plan victory

In the first legislative victory for the Harvesting Clean Energy Action Network, the Washington Legislature has passed a package of bills to build biodiesel and ethanol markets.

The Washington package provides tax incentives for biofuels and mandates use of biofuels by public agencies. Those actions were among a series of steps to build rural clean energy production called for in the Harvesting Clean Energy Action Plan created by the Network. The 2nd annual Harvesting Clean Energy Conference in Pasco in Feb. 2002, where the plan was first discussed, was also where efforts for the Washington biofuels package commenced.

Jim Armstrong of Spokane County Conservation District and Linda Graham of Puget Sound Clean Cities Coalition, the two leading organizers of the effort, decided as a result of their conversations at the conference to press biofuels legislation in the 2003 legislature.

“We decided we just had to do something for biofuels in the legislature,” Armstrong said. “The fact that farmers, environmentalists and economic development agencies were coming together around the Harvesting Clean Energy banner gave us confidence we could win.”

When debate reached the House floor, the prime sponsor of the bills, Rep. Brian Sullivan (D-21st District), noted the legislation promotes both environmental protection and economic development. Rep. Kelli Linville (D-42nd District) praised the way the bills bring together environmental protection and agricultural benefits, adding that the legislation "represents one Washington" due to its statewide benefits and ability to bring together Republicans and Democrats from Eastern and Western Washington.

The biofuels package includes:

HB 1240 - Providing tax incentives for biodiesel and alcohol fuel production.

  • Sales and use tax deferrals on machines, equipment, labor, etc. to construct biodiesel and ethanol production facilities in rural areas and empowerment zones, which covers all but four counties. The deferred taxes need not be repaid if facilities meet requirements of legislation for 7 years.
  • Property tax exemption for biodiesel and ethanol production facilities for 6 years after facility becomes operational. Amount of exemption calculated based on gallons of biodiesel and ethanol produced.
  • Reduced Business & Occupation (B&O) tax rate for biodiesel and ethanol production facilities (.138% compared to typical rate of .4%)

HB 1241 - Providing tax incentives for the distribution and retail sale of biodiesel and alcohol fuels.

  • Allows deduction of B&O taxes owed from retail sale or distribution of biodiesel or ethanol fuels.
  • Exempts, in the form of a remittance, retail sales and use taxes on purchase of equipment, labor and services related to creating biodiesel and ethanol fueling and distribution services.
  • Allows local governments the option to provide for similar retail sales and use tax exemptions.
  • Property tax exemption for biodiesel and ethanol retail sale and distribution services, if at least 75% of activity is biodiesel or ethanol fuel related.

HB 1242 - Establishing requirements for the use of biodiesel by state agencies.

  • Encourages all state agencies to use a blend of 20% biodiesel (B20) with petroleum diesel and mandates use of a minimum of 2% biodiesel blend as a lubricity additive beginning in 2006 when EPA regulations requiring ultra-low sulfur diesel fuel take effect, provided that use of a lubricity additive is warranted and that biodiesel is comparable in performance and cost with other lubricity alternatives available.

HB 1243 - Establishing a biodiesel pilot project for school transportation.

  • Requires superintendent of public instruction to conduct a pilot program using two school districts on the use of biodiesel with ultra low sulfur diesel beginning in 2004.
  • Calls upon the Superintendent of Public Instruction, Department of Ecology, and Office of Community, Trade, and Economic Development to explore alternative means of funding this pilot project including the use of state or federal grants but excluding the use of money from the state general fund.