Backroom deal doesn’t compare with clean fuels program

Earlier this year, Governor Kate Brown made history when she signed into law a bill removing the sunset on our Clean Fuels Program and ending the oil industry’s monopoly on fuel choices for Oregonians. It took six years of public input and democratic process to arrive at that point. Now, after a quick four weeks of closed-door discussions, some lawmakers in Salem want to repeal the Clean Fuels Program as part of a deal to secure votes for a transportation package.

The Governor and Senate leadership have proposed a “replacement” for the Clean Fuels Program to grease the wheels of negotiations. But their proposal will cost the public more and do far less to protect public health and reduce climate pollution, while letting the oil industry off the hook. Their deal would amount to an E-Z Pass for the oil industry, and a toll road for citizens.

Let’s compare how the Clean Fuels Program and the proposed “replacement” stack up.

The Clean Fuels Program

What it does: It guarantees reduction in carbon pollution from transportation fuels by 10% over 10 years.

How it works: Oil importers must meet the standard by investing in lower carbon fuels. Credits, which are proof of pollution reduction, are generated by investing in lower carbon fuels (biofuels, biogas, natural gas, electricity, propane, hydrogen, renewable diesel) based on the extent of that reduction–the lower the carbon, the more credits can be generated. The program does not pick winners and losers, but allows the market to determine the least polluting fuel options. Oil importers choose the best bang for their buck through the credit market, while investments are made to build out the clean fuels infrastructure in the state.

Cost: Only administrative costs. No additional fees required. Businesses invest in clean fuels infrastructure directly.

Actual emissions reduction: 10% lower carbon emissions over 10 years: 7.7 million metric tons of carbon is reduced in the first 10 years, over 1 million metric tons annually thereafter. In other words, by year 15 of the program, over 13 million metric tons of carbon will be reduced.

Accountability mechanism: The oil industry is required to track and report on their pollution and ultimately meet the standard. If emissions go up because they import dirtier fuel, their responsibility increases to invest in cleaner options to meet the overall standard.

The Replacement Proposal

What it does: It repeals the Clean Fuels Program, halves the biofuels requirement and introduces unfair barriers to biofuels producers. It diverts money from programs that already reduce carbon pollution, and shifts the burden of responsibility for paying for the program and reducing pollution from the oil industry to the taxpayers, ratepayers, and the alternative fuel industry.

How it works: The “replacement” is a hodgepodge of different measures implemented by different state agencies, some of which require changes to existing programs. It requires large public investments in new programs, infrastructure, and voluntary incentives. There is no market mechanism.

Cost: The “replacement” package costs $269 million, paid by taxpayers and ratepayers.

Actual Emissions Reduction: The only certain reductions come from the biofuels requirements: 2.5-3.5 million metric tons. This is less than half of what the Clean Fuels Program guarantees. Proponents of the “replacement” package also want to count emissions reductions from voluntary measures which are uncertain, from diverting funds from existing emissions reduction activities to others (robbing Peter to pay Paul), and from double-counting reductions from transportation investments that would have been part of any sound transportation package anyway.

Accountability mechanism: The proposed alternative lets the oil industry off the hook, and shifts the burden of cleaning the air and protecting the climate to the public and the alternative fuels industry. There is no oil industry accountability. The oil industry could pollute more without consequences. Importantly, it imposes unfair barriers to biofuels producers who must prove their product is commercially available, technologically feasible, and cost effective. The oil industry is not required to be cost effective, while biofuels producers must show supply before there is market demand.

Author Bio

Kristen Sheeran

former Oregon Director, Climate Solutions

Kristen Sheeran served as Oregon Director of Climate Solutions. Prior to her work with us, she served as the Vice President of Knowledge Systems at Ecotrust, leading a 15 member team including economists, policy specialists, data analysts, software developers, and GIS analysts. She is also the founder and executive director of the Economics for Equity and Environment Network, a network of more than 300 economists from across the country that are organized and committed to applying their expertise to inform climate and clean energy policy and advocacy.

Kristen has a doctorate in economics, and focused her dissertation on equity and efficiency in mitigating climate change. She was a professor of economics for 7 years at St. Mary’s College of Maryland, and has written and spoken extensively about climate change and clean energy.

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