CEA Warns Against Costly Fuel Program in Oregon
WASHINGTON – At Governor Kitzhaber’s direction, the Oregon Department of Environmental Quality has issued a draft rule for beginning implementation of a state low carbon fuel standard (LCFS) program, calling it a “Clean Fuels Program.” The program closely mirrors other LCFS proposals that have been studied at length and have been found to be devastating to local economies while also being ineffective in curbing emissions. A similar program in California was recently ruled unconstitutional by U.S. District Judge Lawrence O’Neill for violating the commerce clause.
Upon issuance of the draft rule, Michael Whatley, Executive Vice President of the Consumer Energy Alliance, made the following statement:
“Today’s action by the Department of Environmental Quality is a troubling development. Low carbon fuel standard programs like this one, which seek to ration the use of gasoline and diesel, are economic growth killers. These programs mandate the use of biofuels which have limited commercial availability and are more costly for consumers, small business and working families.
“Additionally, studies clearly demonstrate that LCFS programs will prove ineffective in actually reducing carbon emissions. The last thing that drivers in Oregon need is a program that will double their gasoline prices and won’t help the environment.”
A study by Charles River Associates found that an LCFS could create a price shock of about a 30 to 80% increase in the cost of transportation fuels within 5 years of the time the program was implemented and up to a 170% in 10 years. The shock would be caused by the large increase in production of low carbon fuels required to achieve the reductions in emissions required by the standard.
Like the program recently proposed in California, Oregon’s would also be creating a non-competitive situation due to the fact that the state receives the bulk of its fuel from Washington state and California. Fuel providers will have to accept whether they will pay cost of compliance with Oregon or abandon the market altogether. Even those spearheading similar programs have recognized the legal uncertainty surrounding LCFS. Recently, executive director of the Northeast States for Coordinated Air Use Management (NESCAUM) Arthur Marin expressed concern in a recent interview about the constitutionality of California’s LCFS program, pushing NESCAUM to examine alternative models for a low carbon fuel standard.
A copy of the proposed program can be found here.