Low-Carbon Fuels

Transportation accounts for nearly 40% of Oregon's greenhouse gas (GHG) emissions, and the state sends $5 billion out the door every year to import gasoline and diesel. Burning petroleum contributes to air pollution, and dependency on oil leaves workers, businesses and consumers vulnerable to price shocks from an unstable global energy market. No business should be hostage to a single supplier for its most critical raw materials; neither should any state or nation. To protect our jobs and wages, clean our air and maintain our way of life, we must diversify our fuel sources and reduce our reliance on oil. By implementing the Oregon Low Carbon Fuel Standard, we have the opportunity and ability to cut our oil dependence, decrease carbon pollution, and establish a sustainable market for cleaner-burning fuels.

How a Low-Carbon Fuel Standard Works

A LCFS requires that, on average, our transportation fuels become cleaner overtime. The standard reduces the carbon intensity of fuels 10% over a  10-year period.

The standard is measured on a lifecycle basis in order to include all emissions from fuel consumption and production, including the “upstream” emissions that are major contributors to the global warming impact of transportation fuels. 

A LCFS utilizes market-based mechanisms to allow providers to choose how they reduce emissions while responding to consumer demand. For example, providers may purchase and blend more low-carbon biodiesel into diesel products, heavy duty vehicles could switch to natural gas/biogas powered engines, fuel providers could purchase credits from electric utilities supplying low-carbon electrons to electric passenger vehicles, or they could eventually include  low-carbon hydrogen as a product and more--including new strategies yet to be developed.

Benefits of a Low-Carbon Fuel Standard

• Substantially reduces global warming pollution and creates a sustainable and growing market for cleaner fuels.
• Uses a variety of market-based strategies with a flexible phase-in period to achieve goals and meet consumer demand at the lowest cost.
  
• Does not “pick winners” by choosing specific fuels.
  
• Stimulates local fuel development. 
• Creates $43 - $1,607 million in fuel savings. (Alternatives, especially electricity, are much cheaper than oil.)
• Creates 836 - 29,000 jobs over 10 years.
• Increases income in Oregon $60 - $2,630 million over 10 years.

Status of Oregon's Low-Carbon Fuel Standard

In House Bill 2186 of 2009, the Oregon Legislature gave the Environmental Quality Commission (EQC) the authority to adopt a LCFS. The Department of Environmental Quality (DEQ) convened an advisory committee in 2010 (on which OEC sat) to make recommendations for the design and implementation of the standard. DEQ next needs to issue the draft rule for implementation, the legislature needs to fix the 2015 sunset, and the EQC needs to adopt the rule in 2012. To ensure the strongest rule possible, OEC is reaching out to citizens and businesses throughout Oregon to ensure the public interest is heard when the EQC takes up the rule, not just the interests of Big Oil and others who profit from the status quo. Please join us in supporting the rule by signing up to receive our Action Alerts and/or Climate Coolers emails.

A West Coast Low-Carbon Fuel Corridor

By adopting a LCFS, Oregon can join together with other West Coast states and provinces to create a “low-carbon fuels corridor” with harmonized policies and clear market signals that generate better transportation fuels. California adopted a LCFS by Executive Order in 2007 and identified the policy as an “early action measure” under its Global Warming Solutions Act. Washington State is also considering a LCFS. 

Complementing Other Policies

A LCFS would complement the Renewable Fuels Standard (RFS) passed by the Oregon Legislature in 2007, which creates a stable market for biofuels producers and growers of biofuels feedstocks. The RFS spurs research and development into advanced, second-generation biofuels. A LCFS spurs research and development into a wider array of transportation fuels.

A LCFS would also complement an eventual carbon cap-and-trade program. A cap-and-trade program addresses the failure of market prices to capture the damage GHGs are doing to our climate. However, cap-and-trade does not directly address specific sources of carbon emissions where innovation is needed, such as fuels. The carbon price signal provided by cap-and-trade is unlikely to spur large-scale investments in new fuels technology because the price signal may not be high enough and the cross-sector trading that is likely to be allowed means that most reductions under cap-and-trade will come from stationary sources in the near term. This is why complementary policies like a LCFS are needed.