Oregon Lawmakers Look to Swap LCFS for Fuel Tax
(Argus Media) Oregon governor Kate Brown (D) and a group of eight legislators have negotiated a proposal to kill the state’s new low-carbon fuel standard (LCFS) in return for a 4¢/USG rise in the gasoline tax that would pay for transportation infrastructure.
The legislative package released yesterday by state Senate leaders would replace the LCFS with a low-carbon fuel blending program for fuel importers in order to win Republican support for the gas tax increase. The tax would be phased in over two years, with 2¢/USG added in 2016 and 2¢ in 2017. The package also includes increases in various vehicle and driver fees and a new payroll tax for employees in public transit districts. It includes measures that aim to achieve greater greenhouse gas reductions than the LCFS would have.
The new Senate Special Committee on Sustainable Transportation is scheduled to hold a hearing on the package today.
While Democrats hold strong majorities in both chambers of the legislature, they are one vote shy of the three-fifths supermajority needed to pass new taxes in the House. Unanimous Republican opposition to raising the gas tax if the LCFS remains in place forced Democrats back to negotiations and ultimately to sacrifice the program for increased road and transit funding.
The LCFS would require a 10pc cut in the carbon intensity of the state’s fuel mix by 2025. It is set to take effect next year, after Brown in March signed legislation allowing the program to move ahead.
The new blending program would only affect liquid biofuels and build on Oregon’s existing mandates for a 10pc blend of ethanol in gasoline and 5pc blend of biodiesel in diesel, with the aim of achieving a 5pc reduction in carbon intensity over 10 years. The blending program would not have any crediting system, though entities would be able to carry over deficits or surpluses from year to year.
The standards would be set through an annual study of low-carbon biofuel availability in a process that appears to roughly mirror the renewable volume obligations under the federal renewable fuel standard. Low-carbon biofuels would only count as available if they have a “average market retail cost” equal to or lower than that of diesel or gasoline.
The package would also divert 17pc of Oregon’s public purpose charge on ratepayers for an electric vehicle program and allow the state’s utilities to get rate recovery for electric charging stations and natural gas and propane fueling stations. It would also use money from the state’s energy efficiency program to pay for natural gas or propane school buses. READ MORE