Kitzhaber: Low-carbon fuel mandate will go forward

Source: By JONATHAN J. COOPER. Associated Press • Posted: Friday, February 14, 2014

Unable to convince the Legislature to keep Oregon’s clean-fuels program alive past its scheduled expiration next year, Gov. John Kitzhaber said he’s ordering the stricter fuel requirements to move forward anyway.

Oregon’s low-carbon fuel standard aims to reduce the amount of carbon emissions associated with extracting, refining, transporting and burning the fuels used for vehicle transportation.

The Department of Environmental Quality is already requiring fuel producers and importers to report the amount of carbon emissions associated with their fuels. But the department has said it won’t move forward with the second phase of the program, requiring fuel companies to begin reducing the amount of greenhouse gas emissions, unless the Legislature continues the program beyond 2015.

Kitzhaber said Thursday he now wants the department to begin crafting rules needed to implement the second phase.

“We’re here today to try to spark this home-grown industry that can capture a portion of the billions of dollars that Oregonians send out of the state every year to purchase diesel and gasoline and keep those dollars circulating here in our own economy,” Kitzhaber said in a news conference.

Oil companies, truckers, farmers and other large-volume fuel users worry that costs will rise. For a second consecutive year, proponents of the clean-fuel effort have struggled to line up enough votes in the Senate to continue the program indefinitely.

The Department of Environmental Quality is still working out a timeline for the rules to be drafted and adopted, said Margi Hoffmann, Kitzhaber’s energy policy adviser, so it’s not clear when they will actually take effect. They will expire at the end of 2015 unless lawmakers vote to extend the program next year.

Supporters of the clean-fuels program hope to pick up another backer in the Senate in the 2014 election to assure it can pass.

Oregon was one of the first states to adopt a low-carbon fuel standard in 2009, requiring fuel producers to reduce the carbon content of their fuel by 10 percent from their 2010 levels.

Fuel companies could comply by blending in more renewable fuels or by substituting alternative fuels with lower carbon intensity. Companies producing low-carbon fuels would be able to sell pollution credits to higher-polluting fuel producers. Electric utilities or owners of electric-vehicle charging stations also could generate credits based on electricity used to power electric vehicles.

Proponents hope the requirements will spur new clean-fuel innovations and speed the adoption of alternative-fuel technologies.

Fuel producers say it would be impossible for them to comply solely by blending cleaner-burning fuels into gasoline and diesel, so they would have to buy renewable energy credits.

“Don’t go and say, `I’m going to pass a rule that we know you can’t meet so you have to go and pay money,’ ” said Brian Doherty, a lobbyist for the Western States Petroleum Association. “That’s not good for consumers.”

Kitzhaber also said he’s creating a committee of business and union officials that includes representatives both from renewable-energy firms and from other large Oregon companies, including Intel and Northwest Natural.