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Oregon's Low-Carbon Fuel Rule Advances

May 11, 2012
(Maria Gallucci, InsideClimate News)

Oregon took steps this week to implement one of the nation's first rules to slash global warming emissions in transportation fuels.

The Oregon Department of Environmental Quality (DEQ) issued a draft rule Thursday for adopting the state's Clean Fuel Program, which would require oil importers and distributors to reduce the carbon intensity of their fuels by 10 percent by 2025.

DEQ said it expects to release a final rule by the end of this year. The regulations require legislative approval before they can take effect.

The Oregon legislature proposed the low-carbon fuel rule in 2009, which was followed by many months of meetings of a 29-member state advisory committee.

In April, Gov. John Kitzhaber asked the DEQ to develop regulations to implement the program in two phases. The first phase, expected to take effect on Jan. 1, 2013, would require oil suppliers to start collecting and submitting data about the carbon intensity of their fuel mix for two years, measured not just by emissions from tailpipes but across their full lifecycle. The second phase, which could start in 2015, requires them to start cutting carbon emissions from their fuels.

Proponents of the rule in Oregon say it would drive economic development. They point to a recent study by research firm Jack Faucett Associates that found Oregon's Clean Fuel program could increase goods and services produced in Oregon by as much as $900 million in its first decade and create as many as 29,290 jobs.

Opponents say low-carbon fuel standards would send gasoline and diesel prices soaring, derail economic growth and kill jobs.

California has the nation's only low-carbon fuel rule, but it is caught in legal limbo. In a case brought by oil and ethanol interests, a U.S. District Court judge ruled the program to be unconstitutional, because it regulates commercial activity outside state borders, and blocked its enforcement.

While a San Francisco appeals court last month granted California's clean car advocates a temporary victory in the case, the rule's future remains uncertain. 

The nonprofit Consumer Energy Alliance (CEA), one of the nation's biggest opponents of clean fuel rules and a plaintiff in the California suit, called the Oregon draft rule a "troubling development," in a statement. The group said the rule would force refiners in Washington state and California to either pay hefty compliance costs, which would raise prices at the pump for Oregon drivers, or to abandon the state altogether. Oil and gas firms make up roughly one-third of CEA's membership of about 190 organizations. The group also has 400,000 individual members.

Recently, CEA has been working to convince Northeastern states to withdraw from a work-in-progress regional clean fuel program. The group sent letters to attorneys general in the 11 participating states saying the initiative could be unconstitutional and might bury their states in costly lawsuits.

Last month, environmental groups, led by the National Resources Defense Council, sent their own letter to the attorneys general warning that CEA's letter "misrepresents the scope and consequences" of California's legal battle. "Contrary to the claims of CEA's letter, the California litigation is simply not a predictor of the legality of fuel standards still under development in other locations," the groups wrote.

Currently, the Northeastern states are considering alternatives to a low-carbon fuel standard, including making the program voluntary for oil companies.