On March 11, Oregon Governor Kate Brown announced that she will sign a clean version of Senate Bill 324, a bill which removes the sunset date from the state’s low carbon fuel standard (LCFS), more generally known as the Clean Fuels Bill. The program has been in effect in the state since 2009, but has not yet been fully implemented. Previously, the bill was expected to pass widely, but became mired in politics after allegations that former Governor John Kitzhaber’s fiancée, Cylvia Hayes, used her position as First Lady to benefit her environmental consulting business.
Unlike the Renewable Fuel Standard (RFS), which sets carbon reduction thresholds and volume targets for renewable fuels, the LCFS in Oregon, as well as in California and Washington, mandates a ten percent reduction by 2020 relative to 1990 levels in the overall fuel supply’s carbon intensity (CI). Currently, California is revisiting its LCFS after a federal court blocked the standard in 2012, stating it violated the interstate commerce clause by penalizing ethanol and petroleum producers in other states.
U.S. ethanol producers also have argued that the indirect land-use penalty in California’s LCFS unfairly targets their product, and instead favors imports of Brazilian sugar cane ethanol. In Washington’s recently adopted LCFS, state regulators decided to leave out the controversial indirect land use penalty. At this point, it is unclear how Oregon’s DEQ will choose to implement the law.
In Oregon, the Senate bill narrowly passed the House last week, with Republicans and a handful of Democrats voting against the measure due to concerns over impacts to consumers and questions regarding the Department of Environmental Quality’s (DEQ) ability to properly administer the program. Some have estimated that the LCFS may increase gas prices up to 19 cents per gallon by 2025. Landing on her desk last week, Gov. Brown stated Wednesday that “it’s important that Oregon keeps its end of the bargain,” in the development of a West Coast LCFS, despite the measure’s threat to the passage of a state transportation package which includes a gas tax increase.
Brown pledged to closely monitor any “unintended consequences” of the program, and gave examples where the Department of Agriculture or DEQ could become involved in examining the effects of the program on agricultural markets and renewable fuel production. Democrats are hoping these gestures will garner Republican support for a broader transportation funding package. But House Republicans remain unconvinced, calling the LCFS a “second gas tax,” and claim that if the Governor does sign SB 324, they will take the transportation bill off the table. According to Republican spokeswoman Kara Walker, “House Republicans are not going to raise the cost of gas twice on Oregonians.” Democrats remain hopeful, citing the state’s crumbling infrastructure which is in desperate need of upgrades and repairs, as reason enough to revisit the gas tax.
For more information see:
Oregon's clean fuels bill passes House — but barely, Sustainable Buisness Oregon