SB 5036 — Strengthening Washington's leadership and accountability on climate policy by transitioning to annual reporting of statewide emissions data.

CERTIFICATIONS-0034.1 OF ENROLLMENT SENATE BILL 5036 69th Legislature Regular Session Passed by the Senate April 17, 2025 CERTIFICATE Yeas 30 Nays 19 I, Sarah Bannister, Secretary of the Senate of the State of Washington,Washington do69th herebyLegislature certify2025 thatRegular PresidentSession ofBy theSenators SenateBoehnke, theChapman, attachedDozier, isFortunato, SENATEHarris, BILLHasegawa, 5036Short, as passed by the Senate and theWellman HousePrefiled of12/13/24. Representatives on the dates hereon set forth.

Passed by the House April 10, 2025 Yeas 95 Nays 0 Secretary Speaker of the House of Representatives Approved FILED Secretary of State State of Washington Governor of the State of Washington SENATE BILL 5036 AS AMENDED BY THE HOUSE Passed Legislature - 2025 Regular Session State of Washington 69th Legislature 2025 Regular Session By Senators Boehnke, Chapman, Dozier, Fortunato, Harris, Hasegawa, Short, and Wellman Prefiled 12/13/24.

amending RCW 70A.45.00570A.45.005; and 70A.65.130;

1 SB 5036.PL5036 participating in the design of a regional multisector market-based system to help achieve those emission reductions, assessing other market strategies to reduce emissions of greenhouse gases, maintaining and enhancing the state's ability to continue to sequester carbon through natural and working lands and forest products, and ensuring the state has a well-trained workforce for our clean energy future.

TheClimate policy leadership and full accountability for achieving emission reductions includes consistent tracking and annual reporting of statewide emissions in a greenhouse gas inventory as required under RCW 70A.45.02070A.45.020. is an important responsibility that allows the legislature to determine whether state emissions are on a trajectory to achieve statutory emissions reduction limits, or whether new or amended policy interventions are necessary to achieve those limits.

(6) If any revenues, excluding those from state trust lands, that accrue to the state are created by a market system, they must be used for the purposes established in chapter 70A.65 RCW and to further the state's efforts to achieve the goals established in RCW 70A.45.020, p.

2 SB 5036.PL5036 for the purposes established in chapter 70A.65 RCW and to further the state's efforts to achieve the goals established in RCW 70A.45.020, address the impacts of global warming on affected habitats, species, and communities, promote and invest in industry sectors that act as sequesterers of carbon, and increase investment in the clean energy economy particularly for communities and workers that have suffered from heavy job losses and chronic unemployment and underemployment.

p.(i) Develop and implement a system for monitoring and reporting emissions of greenhouse gases as required under RCW 70A.15.2200;

3 SB 5036.PL (i) Develop and implementp. a system for monitoring and reporting emissions of greenhouse gases as required under RCW 70A.15.2200;

and3 SB 5036 (ii) Track progress toward meeting the emission reductions established in this subsection, including the results from policies currently in effect that have been previously adopted by the state and policies adopted in the future, and report on that progress.

(2) ((ByBy December 31st of each even-numbered((even-numbered)) year beginning in 2010,((2010)) the))2026, (a)the The department and the department of commerce shall post and maintain on the department's website and report to the governor and the appropriate committees of the senate and house of representatives the total emissions of greenhouse gases for the ((preceding))preceding most((two recentyears)) twoyear, years for which such data are available, and totals in each major source sector, including emissions associated with leaked gas identified by the utilities and transportation commission under RCW 81.88.160.

The(3) reportExcept requiredfor underpurposes thisof sectionreporting, mustemissions beof completedcarbon bydioxide Decemberfrom 31stindustrial combustion of eachbiomass even-numberedin yearthe throughform 2030,of fuel wood, wood waste, wood by-products, and mustwood residuals shall not be completedconsidered bya Decembergreenhouse 31stgas ofas eachlong yearas beginningthe Decemberregion's 31,silvicultural 2031.sequestration capacity is maintained or increased.

(b) In addition to the report required in (a) of this subsection, by December 31, 2027, and December 31, 2029, the department and the department of commerce shall post and maintain on the department's website and provide notification to the governor and the appropriate committees of the senate and the house of representatives summarizing the total emissions of greenhouse gases for the most recent year for which such data is available, and totals in each major source sector reported as required under (a) of this subsection.

(3) Except for purposes of reporting, emissions of carbon dioxide from industrial combustion of biomass in the form of fuel wood, wood p.

4 SB 5036.PL waste, wood by-products, and wood residuals shall not be considered a greenhouse gas as long as the region's silvicultural sequestration capacity is maintained or increased.

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3.

RCW 70A.65.130 and 2021 c 316 s 15 are each amended to read as follows:

(1) For the benefit of ratepayers, allowances must be allocated at no cost to covered entities that are natural gas utilities.

(a) By October 1, 2022, the department shall adopt rules, in consultation with the utilities and transportation commission, establishing the methods and procedures for allocating allowances to natural gas utilities.

Rules adopted under this subsection must allow for a natural gas utility to be provided allowances at no cost to cover their emissions and decline proportionally with the cap, consistent with RCW 70A.65.070.

Allowances allocated at no cost to natural gas utilities must be consigned to auction for the benefit of ratepayers consistent with subsection (2) of this section, deposited for compliance, or a combination of both.

The rules adopted by the department pursuant to this section must include provisions directing revenues generated under this subsection to the applicable utilities.

(b) By October 1, 2022, the department shall adopt an allocation schedule by rule, in consultation with the utilities and transportation commission, for the first two compliance periods for the provision of allowances for the benefit of ratepayers at no cost to natural gas utilities.

(c) By October 1, 2028, the department shall adopt an allocation schedule by rule, in consultation with the utilities and transportation commission, for the provision of allowances for the benefit of ratepayers at no cost to natural gas utilities for the compliance periods contained within calendar years 2031 through 2040.

(2)(a) Beginning in 2023, 65 percent of the no cost allowances must be consigned to auction for the benefit of customers, including at a minimum eliminating any additional cost burden to low-income customers from the implementation of this chapter.

Rules adopted under this subsection must increase the percentage of allowances consigned to auction by five percent each year until a total of 100 percent is reached.

(b) Revenues from allowances sold at auction must be returned by providing nonvolumetric credits on ratepayer utility bills, prioritizing low-income customers, or used to minimize cost impacts p.

5 SB 5036.PL on low-income, residential, and small business customers through actions that include, but are not limited to, weatherization, decarbonization, conservation and efficiency services, and bill assistance.

The customer benefits provided from allowances consigned to auction under this section must be in addition to existing requirements in statute, rule, or other legal requirements.

(c) Except for low-income customers, the customer bill credits under this subsection are reserved exclusively for customers at locations connected to a natural gas utility's system on July 25, 2021.

Bill credits may not be provided to customers of the gas utility at a location connected to the system after July 25, 2021.

(3) In order to qualify for no cost allowances, covered entities that are natural gas utilities must provide copies of their greenhouse gas emissions reports filed with the United States environmental protection agency under 40 C.F.R.

Part 98 subpart NN - suppliers of natural gas and natural gas liquids for calendar years 2015 through 2021 to the department on or before March 31, 2022.

The copies of the reports must be provided in electronic form to the department, in a manner prescribed by the department.

The reports must be complete and contain all information required by 40 C.F.R.

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98.406 including, but not limited to, information on large end users served by the natural gas utility.

For any year where a natural gas utility was not required to file this report with the United States environmental protection agency, a report may be submitted in a manner prescribed by the department containing all of the information required in the subpart NN report.

(4) To ((continue receiving)) receive no cost allowances, a natural gas utility must provide to the department ((the United States environmental protection agency subpart NN greenhouse gas emissions report for each reporting year in the manner and by the dates provided)) an annual greenhouse gas emissions report as required by RCW 70A.15.2200(5) ((as part of the greenhouse gas reporting requirements of this chapter)).