Proposed safeguards in Washington State’s Clean Fuel Standard are crucial

A new bill being considered in Washington State would delay, for at least a couple of years, implementation of proposed rules that constrain crediting of avoided-methane offsets in the state’s Clean Fuel Standard (CFS). These offsets expand the scope of greenhouse gas (GHG) accounting for renewable natural gas (RNG) pathways to include avoided emissions from agricultural waste management and organic waste diverted from landfills. While RNG from waste is a low-GHG resource suitable for producing alternative fuels, such offsets divert CFS support to the agricultural sector and away from transport, the largest source of GHG emissions in Washington State.

That means the constraints on the offsets, which were proposed by the Department of Ecology, are important safeguards. Any delay would endanger the effectiveness of the CFS. Let’s review why.

The ICCT has extensively highlighted issues with unrestricted avoided-methane offset crediting for RNG in clean fuels programs, and California indeed adopted some restrictions in its recent Low Carbon Fuel Standard (LCFS) rulemaking. Washington’s proposed CFS update follows suit and would introduce a 15-year limit on avoided methane crediting for each RNG project. It would also require that participants demonstrate that at least some RNG is physically flowing into Washington; this starts in 2032 for fuel used in vehicles and in 2037 for RNG used for production of other alternative fuels. But there’s also a provision in Senate Bill (SB) 5601 that would override these safeguards, at a minimum through 2026. Its language targets RNG used for producing sustainable aviation fuel (SAF). But the proposed rules are not SAF-specific. Therefore, the safeguards could be jeopardized if SB 5601 is adopted as currently written.

There are two primary reasons for the concern. First, for as long as avoided-methane offsets are in use, a fuels program is not technology neutral because it allows some pathways to benefit from offset accounting but not others. A recent ICCT paper highlighted this issue by demonstrating the excessive policy value of avoided-methane hydrogen pathways under the LCFS compared with a technologically advanced green hydrogen pathway with near-zero in-sector emissions. Under a $75-per-credit scenario, dairy-RNG hydrogen in California could receive $3.30 per kg in credits compared with only $1.40 for green hydrogen. Similar outcomes are expected when comparing RNG-based SAF production with more scalable advanced solutions like e-kerosene, which is already being pioneered in Washington State. If the provision in SB 5601 that overrides safeguards on avoided-methane offsets takes effect, CFS support for innovative transportation technologies like e-kerosene could instead be diverted to pathways that rely on avoided-methane offsets.

Second, avoided-methane offsets can endanger the stability of a fuels program by disrupting the balance between the supply and demand of credits. This happens because offsets can enable deeply negative carbon intensity values that lead to a decoupling of credit generation from the supply of fuel. In other words, credits would be generated not from displacing fossil fuel, but from crediting changes in manure management practices at farms across the country. As shown in the figure, credit generation from dairy digester/animal waste compressed natural gas in the LCFS rapidly outpaced fuel volumes. In the second quarter of 2024, dairy and swine RNG generated 20% of program credits while making up only 3% of the alternative fuel used in California. This oversupply has contributed to a growing credit bank and declining LCFS credit values.

With credit values in the Washington CFS already declining to $22.93 per MT in January 2025, an influx of methane-offset-supported, negative-carbon-intensity RNG pathways would drive the price down further. This could severely damage the CFS’s ability to support in-sector emission reductions. In particular, low credit prices could stymie any CFS support for zero-emission vehicles and charging infrastructure aligned with Washington’s ambitious Clean Vehicles Program. This support is especially critical now that federal support for zero-emission vehicle adoption and charging infrastructure deployment is in question.

Allowing avoided-methane offsets without restrictions is all risk and no reward. It has the perverse effect of providing greater incentives to pathways that have less impact on in-sector emissions. If any language in SB 5601 serves to prevent or delay the implementation of the proposed safeguards, this would be the likely, unfortunate outcome.