By: Pete Danko, Portland Business Journal
As expected, Oregon's Clean Fuels Program exacted a rising cost at the pump in 2019, although the toll remained a small fraction of the price of gasoline and diesel.
The Department of Environmental Quality is required by law to calculate the cost each year. It said that in 2019, the program added 2.57 cents to the price of a gallon of gasoline and 2.94 cents to the price of diesel. In 2018, the cost amounted to just less than a penny per gallon for gasoline and 1.13 cents per gallon for diesel.
At the same time, greenhouse gas emission reductions also increased — from about 978,000 metric tons in 2018 to 1.27 million tons last year. Since the program began in 2016, GHG reductions total just over 4 million tons, the equivalent of taking 866,816 cars off the road for a year, according to an Environmental Protection Agency calculator.
The Oregon program requires fuel providers to meet increasingly stringent targets for carbon intensity, a measure of a fuel’s lifecycle greenhouse gas emissions. Providers who don’t hit the target can make up their deficit by buying credits that are generated when lower-emissions fuels are deployed.
Credit prices rose dramatically in the first half of 2019 and more or less plateaued until recently, when the Covid-19 pandemic led to a sharp decrease in fuel consumption and credit prices softened. Analysts say the longer-term impact of the pandemic on credit prices is hard to predict, however, as it could also affect how many credits are generated.
For 2020, Oregon fuel importers are required to deliver fuel 2.5 percent under the 2015 carbon intensity baseline, up from 1.5 percent last year. The target will gradually increase to 10 percent by 2025, the last year of the program as originally envisioned, but Gov. Kate Brown recently ordered the program be extended to 2035, with an ultimate reduction target of 25 percent.
The Department of Environmental Quality this week laid out a timetable that would bring a rule proposal to the Environmental Quality Commission in the middle of 2022.