Oregon Approves Phase One of Clean Fuels Program

The Oregon Environmental Quality Commission recently approved Phase I of the Oregon Clean Fuels Program. This program will implement a low carbon fuel standard, one of a handful of actions set out in HB 2186 (2009) that the Oregon Department of Environmental Quality (DEQ) may adopt to reduce greenhouse gas emissions. This is the first of two required approval rounds for the program, eventually aiming to lower fuel greenhouse gas emission intensity to ten percent below 2010 levels.

Phase I will require fuel importers and suppliers in the State of Oregon to monitor and report fuel volumes and carbon intensity (the amount of carbon emissions per unit of energy). Importantly, the program will use lifecycle analysis to incorporate total emissions from fuel uses, including the production and refining processes as well as direct fuel combustion.

If approved after further study and development, Phase II would require fuel suppliers to gradually lower fuel greenhouse gas emission intensity until it is ten percent below 2010 levels, with achievement anticipated by 2025. Covered entities could lower emissions in the production, storage, transportation, and combustion of fuels, as well as by providing an increased percentage of biofuels, such as biodiesel or ethanol, or other alternative fuels, such as electricity. Additionally, companies could participate in a credit market to buy or sell credits to fulfill their requirements. Approval of Phase II would extend the program past its current expiration, or ‘sunset date,’ at the end of 2015.

Proponents of the program argue that it is a flexible and effective approach to addressing greenhouse gas emissions. A support coalition has formed, called Clean Fuels Now; its members emphasize the economic benefit from new business opportunities related to clean technology and alternative fuels. Contrarily, opponents expressed concern that the new Clean Fuels Program will be expensive due to monitoring and reporting costs, as well as increased fuel prices. However, there are protective safeguards in place to avoid consumer fuel price increases. Another concern is that the program is moving too quickly, particularly in light of a pending lawsuit against California’s similar low carbon fuel standard, part of that state’s global warming law, AB 32.

The transportation sector produces approximately one-third of Oregon greenhouse gas emissions.  The Clean Fuels Program is intended to complement, not replace, the Oregon Renewable Fuel Standard, which passed in 2007 and requires that gasoline contain at minimum ten percent ethanol and diesel contain at minimum five percent biodiesel. Additionally, the program is an important component of Oregon’s broader climate change actions – such as the Global Warming Commission’s Roadmap to 2020

Oregon was one of the first states to adopt a low carbon fuel standard in 2009. For more information on low carbon fuel standards across the country, this C2ES map covers states that are considering or have approved similar policies.