Regulated Parties

1. Regulated Parties • Person responsible for meeting the Clean Fuel Standard for: • gasoline and gasoline substitutes • diesel fuel and diesel fuel substitutes • PRODUCER OR IMPORTER: • for gasoline, diesel and other liquid blendstocks • for liquid alternatives not blended with gasoline or diesel fuel • for blends of liquid alternatives fuels and gasoline or diesel fuel

2. Clean Fuel Standard FUEL PRODUCERS AND IMPORTERS WOULD GRADUALLY INTRODUCE LESS-POLLUTING FUEL OVER A 10-YEAR PERIOD.

3. Gasoline/Diesel Reductions gCO2e/MJ

4. Clean Transportation Fuels • Gasoline • Diesel fuel or ultra-low sulfur diesel • Fossil CNG, fossil LNG, or fossil L-CNG • Bio-CNG, bio-LNG, bio-L-CNG •  Electricity •  Compressed or liquefied hydrogen (“hydrogen”) •  A fuel blend containing hydrogen (“hydrogen blend”) •  A fuel blend containing greater than 10 percent ethanol by volume •  A fuel blend containing biomass-based diesel •  Denatured fuel ethanol •  Neat (100 percent) biomass-based diesel •  Any other liquid or non-liquid fuel

5. Exempt Fuels • TRANSPORTATION FUEL SUPPLIED FOR USE IN THE FOLLOWING VEHICLES WOULD BE EXEMPT : • Aircraft • Racing vehicles • Military tactical vehicles and tactical support equipment • Locomotives • Ocean-going vessels

6. Credit Generators • PRODUCERS OF CLEAN FUELS MAY GENERATE CREDITS BY: • Producing low-carbon transportation fuels that are below the clean fuel standard

7. Credit Generators • FOR NATURAL GAS • Fossil CNG – owner of the fueling equipment at the dispensing location. • Fossil LNG and fossil L-CNG – owner of the fossil LNG or fossil L-CNG before it is transferred to storage at the dispensing location. • For biomethane(bio-CNG, bio-LNG, and bio-L-CNG) – producer of the fuel • FOR HYDROGEN OR A HYDROGEN BLEND – OWNER OF THE FINISHED FUEL • FOR LIQUEFIED PETROLEUM GAS (PROPANE) - OWNER OF THE FUELING EQUIPMENT AT THE DISPENSING LOCATION.

8. Credit Generators • FOR ELECTRICITY • Residential EV charging: electrical distribution utility • Non-residential EV charging: third party non-utility electric vehicle service provider OR the electrical distribution utility • EV fleet charging: fleet operator OR electrical distribution utility • Private access EV charging: business owner OR electrical distribution utility

9. Compliance Obligation • With a few restrictions, the compliance obligation could be transferred • Both parties to the transfer would have to agree to the transfer • The transfer would need to be recorded in the Reporting System • Would occur when the ownership of the fuel changes.

10. Credit Basics CREDITS MAY BE GENERATED CREDITS MAY BE BANKED CREDITS MAY BE SOLD OR TRADED

11. Online System

17. Selecting Fuel Pathways

18. Fuel Life Cycle – WA Blendstock Oil Well Refinery Vehicle Transportation Transportation

19. Fuel Life Cycle – Biofuel

20. Fuel Pathways FUEL PATHWAY APPROVAL • CA pathways approved for WA • Regulated parties and credit generators would use carbon intensity values in lookup tables for: • Gasoline and gasoline substitutes (Table 3) • Diesel and diesel substitutes (Table 4)

21. Individual Fuel Pathways • Credit generators would be able to request approval of a new pathway, IF… • there was no approved pathway in the carbon intensity lookup tables, AND • there was no other existing, approved California pathway • Credit generators may request to modify a pathway for utility-specific energy use

22. Individual Fuel Pathways Regulated parties and credit generators would have to obtain a new pathway, IF • Pathway was no longer representative • There was a process change -  5g/20%  Use default CI for indeterminate fuel pathways: • Gasoline and gasoline substitutes (Table 3) • Diesel and diesel substitutes (Table 4)

23. Individual Fuel Pathways WASHINGTON APPROVAL PROCESS • Modeled using Washington GREET • Proof of delivery to Washington • Provide documentation • Ecology approval

24. Demonstrating Compliance

25. Compliance SYSTEM WHERE PRODUCERS AND IMPORTERS CAN GENERATE, BUY, SELL, EXCHANGE AND BANK CREDITS • Produce low-carbon fuels. • Blend biodiesel or ethanol in gasoline or diesel. • Purchase credits from others who have excess credits. • Any combination of these.

26. Tracking and Reporting QUARTERLY REPORT ANNUAL REPORT • Regulated parties • Credit generators WHAT TO REPORT • Volume • Carbon intensity • Crude oil

27. Credits and Deficits Credits have no expiration date Can transfer credits Buy credits • Unable to borrow or use anticipated credits BUY CREDITS Balance to zero OFFSET DEFICITS

28. Compliance Year January 1 – December 31 • Meet carbon intensity • Buy credits

29. Balance Period Compliance year has ended In not in compliance 3-month balance period Buy credits JAN FEB MAR

30. Credit Clearance Market credit clearance market Compliance year has ended – not complied Balance period– not complied

31. Credit Clearance Market Enter credit clearance market Ecology calls for credits andmaximum credit value is announced Buyers and sellers come together to resolve accounts

32. Deficit Carryover • If there are not enough credits to resolve accounts, deficits carryover • Carryovers • up to 5 years • 5% added to deficit annually

33. Purpose of Cost Containment Provision PURPOSE Ensure that the Clean Fuel Standard achieves maximum greenhouse gas emissions reductions within a reasonable and predictable range of costs. GOALS • Provides additional compliance options • Strengthens incentives to invest in low-CI fuels • Increases certainty regarding the maximum cost of compliance