Oregon Climate Change: Governor’s New Plan Leans on Supersizing the Clean Fuels Program

by Ted Sickinger (The Oregonian/OregonLive) ... The Clean Fuels Program has been humming along in the background for four years now, helping tamp down Oregon’s greenhouse gas emissions at a nominal cost – pennies on the gallon so far. That’s a promising result. And it’s one the governor hopes to build on, as emissions from gas and diesel account for about a third of Oregon’s total, and they’ve been stubbornly drifting upward since the end of the great recession, following trend lines in the economy.

The Clean Fuels Program, also known as the low carbon fuel standard, is designed to reduce the “lifecycle carbon intensity” of fuels, or the total emissions that come from the production, processing, transportation and consumption of each unit of fuel consumed in the state. In 2009, the Legislature set a target of reducing the carbon intensity of Oregon’s transportation fuel mix to 10% below 2015 levels by 2025.

The governor’s plan doubles that goal and more, seeking to reduce the carbon intensity of the state’s fuel mix 20% below 2015 levels by 2030 and 25% below that level by 2035. That’s accomplished by increasing the use of cleaner fuels – ethanol, biodiesel, renewable diesel, electricity, propane, compressed natural gas, renewable natural gas, eventually hydrogen – in the state’s overall fuel mix.

Every year, providers of transportation fuels must tell the Department of Environmental Quality the volume and the mix of fuels they’re bringing into the state. The fuels are measured against the standard. Any with a carbon score above the standard generates a deficit, and those below generate a credit. The agency determines the overall lifecycle emissions from each importer’s fuel mix, and requires them to buy credits to cover each ton of carbon emissions above the standard.

The carbon intensity of diesel and gasoline is above the state emissions threshold, so the fuels generate compliance deficits that importers need to cover by purchasing credits, or offsetting them with imports of cleaner fuels. Utilities that supply electricity for electric vehicles, or manufacturers of ethanol and biodiesel, meanwhile, generate credits that they can turn around and sell, using the proceeds to pay for charging stations or lower the cost of the alternative fuels they’re producing.

Essentialy, the state is punishing distributors selling dirty oil and rewarding companies that sell the cleanest. But it also incentivizes oil companies to invest in more efficient, lower-emission equipment, and where possible, blend more low-carbon fuels into their overall mix.

The state standard took effect in 2016, and is gradually ratcheting down to the existing goal of reducing the carbon intensity of Oregon’s fuel mix by 10% below 2015 levels by 2025. In 2019, the standard was 2.5% below 2015 levels, so fuel importers have to accelerate their efforts to reach the 10% reduction in the next six years.

Looking at those numbers, backers conclude the program has achieved more reductions than required to date.

The governor’s plan would strengthen the emissions standard to 25% below 2015 levels by 2035. That would give Oregon the most aggressive standard in the country.

That’s still way off the state’s overall emission goals, which are a 45% reduction from 1990 levels by 2035 and 80% below that level by 2050. The dates on the two standards don’t match, and Oregon’s transportation emissions increased about 10% between 1990 and 2015, so the gap is even bigger than the percentage reductions imply.

Supersizing the program will require extensive rulemaking, including a public comment period that could reprise the debate over the cost and effectiveness of the program.

The petroleum association has opposed the program in the past, calling it an “inefficient and ineffective path towards emissions reductions.” It challenged the rules in court in 2015, but the Oregon Court of Appeals upheld them. READ MORE