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Low Carbon Fuel Standard Passes House 31 to 29

The House of Representatives debates Oregon's Low Carbon Fuel Standard
The House of Representatives debates Oregon’s Low Carbon Fuel Standard

Yesterday, in the House of Representatives, Senate Bill 324 passed 31 to 29. Those opposing this vote included all twenty-five House Republicans along with four House Democrats including: Rep. Jeff Barker, Rep. Debbie Boone, Rep. Caddy McKeown, and Rep. Brad Witt. SB 324 removes the 2015 sunset on DEQ’s low carbon fuel standard (LCFS) program. This allows for its full implementation requiring a 10% reduction in the carbon intensity of most fuels by 2025.

As reported by the Oregonian, “Oregon’s clean fuels program…would set progressively tighter limits on fuels’ carbon ‘intensity’ over the next decade.” The DEQ has said that the LCFS will lead to an increase of 4 cents to 19 cents per gallon of fuel, whereas industry experts say an increase will be somewhere between 33 cents to $1.06 per gallon of fuel.

The Editorial Board also noted that “in essence, the standard is a way of both forcing customers to buy higher-priced ‘clean’ fuels and subsidizing those who produce them. It is, in effect, a global-warming gas tax.”

In yesterday’s floor session, Representative Mark Johnson (R- Hood River) and Representative Cliff Bentz (R- Ontario) brought forward an alternative plan that would address the important issue of carbon output reduction in Oregon by continuing to utilize clean fuels in the state and investing in carbon reduction Research and Development Initiatives at the state’s flagship universities. The minority report failed by a vote of 35-25 (a straight party line vote).

After the minority report failed to pass, both Republicans and Democrats shared their views on the impact the passage of SB 324 could have on the economy, on universities, and on Oregon’s families both urban and rural.

Representative Cliff Bentz highlighted that the amount of carbon per cubic meter that the bill hopes to reduce, does not make up for the potential half a billion dollar annual price tag that the program will cost tax payers. Oregon’s Constitution requires all direct increases in the gas tax be invested in maintaining the state’s roads and infrastructure. The LCFS will raise gas prices; however, none of the increases will go toward fixing roads or infrastructure.

Representative John Davis (R-Wilsonville) also released a newsletter on the topic of LCFS shortly before the convening of the House. A copy of his newsletter can be found here. Similarly, Representative Brad Witt (D- Clatskanie) released a newsletter detailing the “red flags” of SB 324 which can be found here.

The passage of this bill has other important implications to AGC, its members, and our industry. During the over five hour House Floor debate, many legislators underscored that the passage of the LCFS and the increased fuel costs will make it very difficult to pass a much needed statewide transportation funding package in the 2015 session.

AGC – as a member of the Oregonians for Sound Fuel Policy Coalition that includes the Oregon Trucking Association, Association of Oregon Industries, Oregon Farm Bureau, and many more – has long opposed the original bill due to its specific impacts on the construction industry and the broader economy. Throughout multiple legislative sessions, alternatives to the LCFS have been discussed that would not have had the same negative impacts.

Although the program was created in the 2009 Legislative Session, the only substantive element currently in operation is a reporting requirement for fuel transactions by Oregon importers and producers. This means that the LCFS has never been implemented in Oregon.

The bill will now head to new Governor Kate Brown’s desk where all indications are she will sign the bill into law.

For questions related to AGC’s position on Oregon’s low carbon fuel standard or Senate Bill 324, please contact AGC’s Public and Strategic Affairs Director, John Rakowitz , 503-317-1781.

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