Oregon's Low Carbon Fuel Standards

Each type of transportation fuel (gasoline, diesel, natural gas, etc.) contains carbon in various amounts. This is also known as the "carbon content" of a fuel. When the fuel is burned, that carbon turns into carbon dioxide (CO₂), which is a greenhouse gases. The lower the carbon content of a fuel, the fewer greenhouse gas emissions it produces.

Extracting or growing the raw materials to make fuel, refining, transporting, and storing it also produces greenhouse gases. The sum of all the greenhouse gases emitted throughout the lifecycle of the fuel is called its "carbon intensity." The goal of Oregon's Low Carbon Fuel Standards is to reduce the average carbon intensity of the mix of transportation fuels used in Oregon by 10 percent over a 10 year period. There are two standards, one for gasoline and its substitutes and one for diesel and its substitutes.

Oregon's Low Carbon Fuel Standards do not mandate the use of any specific fuel. Instead, fuel importers and distributors can use a mix of traditional fuels and lower carbon alternative fuels to meet the standards. As the standard tightens over time, fuel suppliers and distributors will need to increase the use of lower carbon fuels. Producers of low carbon fuels can also generate credits that fuel suppliers or distributors could use to help meet their obligations under the program.

Biofuels such as ethanol and biodiesel, as well as alternative fuels such as hydrogen, electricity, natural gas, and biogas can all help Oregon meet this standard. In addition to reducing greenhouse gas emissions, low carbon fuel standards promote the production of advanced bio-fuels in Oregon, which provide economic growth opportunities for the state.

The regulatory requirements to meet the Low Carbon Fuel Standards would apply to importers of transportation fuels, primarily producers and distributors. The obligation to meet a low carbon fuel standard would not apply to local gas stations unless they import their own fuel. Individuals will not have to comply with the Low Carbon Fuel Standards.

Oregon's Low Carbon Fuel Standards include exemptions to ensure that fuels used in specific applications and with special performance needs do not need to comply. These include farm vehicles and tractors, log trucks, aircraft, racing vehicles, military tactical vehicles, ocean-going vessels, and interstate locomotives. Oregon's Low Carbon Fuel Standards also provide for deferrals of the standards if investigations show that an inadequate supply of low carbon fuels or credits needed to meet the standards exists. These provisions exist for both temporary and forecasted supply shortages.

Analysis shows that low carbon fuel standards can result in lower costs at the pump for fuel users. But if prices do become too high as a result of the low carbon fuel standards, safeguards are included to make adjustments to protect consumers.

House Bill 2186 specifically exempts fuels going into farm trucks and tractors from having to comply with the Low Carbon Fuel Standards. Therefore, fuel distributors supplying these vehicles with fuel can subtract these volumes when calculating their compliance obligations. Low Carbon Fuel Standards create a regulatory incentive to produce biofuels locally. This may include growing new oilseed crops such as canola and mustard to make biodiesel. This may also include producing cellulosic ethanol from farmed trees or agricultural residues like corn stover, orchard and vineyard prunings, and grass straw residue.

HB 2186 instructed the Environmental Quality Commission (EQC) and DEQ to consider flexible implementation approaches to minimize compliance costs. DEQ considered safety, feasibility, cost effectiveness, and analyses already undertaken by other states considering similar measures.

DEQ recruited 29 diverse stakeholders to form an advisory committee to provide input on how the Low Carbon Fuel Standards should be designed to meet the Legislature's goals. The advisory committee was chaired by Mark Reeve, past chair of the EQC. The advisory committee met 13 times over the course of 13 months to address essential technical and policy issues affecting program design. The committee's discussions are being used by DEQ to develop draft rules which will later be vetted through a public stakeholder process.

DEQ also formed an interagency team made up of various agencies that have some jurisdiction or interest over how transportation fuels are regulated. The goal of this team was to share data and collaborate on state-level policies.

In addition, DEQ consulted with the California Air Resources Board, agencies in Washington and the Northeastern and Mid-Atlantic states, and British Columbia Canada which are in various stages of designing their own low carbon fuel standards. California is pioneering the design of the nation's first low carbon fuel standard, and DEQ can model much of Oregon's program on that work. However, DEQ will customize its program to best fit the Oregon fuels market and include several special features required by the Oregon legislature in House Bill 2186 (2009).

In early 2011, DEQ will develop draft low carbon fuel standards rules. Once the draft rules are developed, DEQ will begin an informal public stakeholder process followed by a formal public stakeholder process to seek the public’s review and comment on the draft rules. The draft rules may be modified based on public comments received. DEQ hopes to take its final proposed rules to the EQC for consideration at its December 2011 meeting.

You can receive updates throughout DEQ's committee and rulemaking process by signing up for our email list.

Under Executive Order 09-05, the Washington Department of Ecology is assessing what low carbon fuel standard provisions, including low carbon fuel standards currently under consideration in other states, would best help Washington State meet its greenhouse gas emissions reduction goals. The Department of Ecology will submit recommendations to the Governor by July 2010 on whether to pursue adoption of a Washington low carbon fuel standard, what low carbon fuel standard provisions would best fit, and how to implement a program if recommended.