B100 Fuel, living on BioDiesel

The biofuels bill (HB 3481) now heads to a conference committee, which may decide the fate of the bill this week. As you know, the Oregon House and Oregon Senate passed distinctly different versions of HB 3481.  The conference committee’s charge is to develop a compromise bill that both the House and Senate can agree on. 

OEC believes that several pieces of the bill are on firm footing, including the property tax exemption for production facilities, the tax credits for growers and producers, the ban on MTBE, the expedited energy facility siting, and the reduction in the fuel tax on biodiesel.

Less certain is the outcome of the Renewable Fuel Standard, funding for the Clean School Bus Grant Fund, the mandate that state government use biodiesel, and the controversial expansion of the Pollution Control Tax Credit.

We encourage you to contact the conference committee members to make one final plug for the biofuels legislation!  Please do so within the next 48 hours.

CONFERENCE COMMITTEE MEMBERS

Senator Ryan Deckert, 503-986-1714, sen.ryandeckert@state.or.us

Senator Frank Shields, 503-986-1724, sen.frankshields@state.or.us

Senator Ben Westlund, 503-986-1727, sen.benwestlund@state.or.us

Representative Gordon Anderson, 503-986-1403, rep.gordonanderson@state.or.us

Representative Brian Boquist, 503-986-1423, rep.brianboquist@state.or.us

Representative Mike Schaufler, 503-986-1448, rep.mikeschaufler@state.or.us

Below is an explanation of OEC’s position on the key pieces of the bill that are still uncertain.

Chris Hagerbaumer
Oregon Environmental Council

503-222-1963 x102

WHY OEC SUPPORTS A RENEWABLE FUEL STANDARD

The Renewable Fuel Standard would require oil companies to blend 10% ethanol into gasoline by 2010 and 2% biodiesel into diesel by mid-2006, rising to 5% biodiesel by 2010.  It is tied to in-state production –- the requirement would not go into effect unless a portion of the renewable fuel were produced in Oregon.

By requiring a minimum blend of renewable fuel in gasoline and diesel sold in the state, the Renewable Fuel Standard would reduce our dependence on petroleum and save consumers money at the pump.  A recent Consumer Federation of America publication reports that major oil companies cost drivers as much as 8 cents a gallon by not blending lower-cost ethanol.  The Renewable Fuel Standard also ensures a steady market for biofuels producers interested in locating in Oregon. 

A Renewable Fuel Standard requires oil companies to do their part to clean up our air and move toward a renewable fuel future.  Oil companies resist substituting biofuels for petroleum fuels because doing so allows them to limit competition and keep petroleum fuel prices high. A Renewable Fuel Standard would create a freer and more competitive market, resulting in lower prices for consumers.

A Renewable Fuel Standard is very timely.  The oxygenated fuel requirement for gasoline in the Portland metro area will be dropped after 2007. We therefore need a statewide requirement.  In addition, the 2% biodiesel blend could act as a necessary lubricant for ultra-low sulfur diesel (ULSD).  By federal mandate, ultra-low sulfur diesel fuel will replace conventional on-road diesel nationwide beginning June 2006. ULSD will require the addition of a “lubricity agent.” By instating a Renewable Fuel Standard, the Legislature would ensure that Oregon’s fuel distributors will mix a nontoxic, renewable lubricity agent produced in Oregon instead of a chemically-derived lubricity agent produced elsewhere.

WHY OEC SUPPORTS FUNDING FOR THE CLEAN SCHOOL BUS GRANT FUND

Recent studies indicate serious health risks to children from exposure to diesel school bus exhaust.  The Clean School Bus Grant Fund will help school districts replace their oldest, dirtiest school buses, install pollution control devices, and purchase biodiesel.  There are federal funds for school bus clean up, but the Clean School Bus USA grant program requires a 5% cost share.  States that can provide or exceed this match requirement are much more competitive. Our children deserve cleaner air.

WHY OEC SUPPORTS A REQUIREMENT THAT STATE GOVERNMENT USE BIODIESEL

The original legislation included a requirement that state government displace with biodiesel at least 5% of the total amount of diesel it consumes in on- and off-road diesel engines.  This builds the market for biodiesel, requiring the state to lead by example in a very flexible way. 

WHY OEC DOES NOT SUPPORT EXPANSION OF THE POLLUTION CONTROL TAX CREDIT

Associated Oregon Industries persuaded lawmakers to insert language into the House version of HB 3481 that would expand and extend the state's pollution-control tax credit (PCTC) from its 2008 termination date to 2016.  This rolls back a compromise that was made in 2003.  The PCTC was created in 1967 to help industries put new pollution controls into place. Now the tax credit is nothing more than a subsidy which pays polluters to obey clean air and water laws that have been on the books for years.  In addition, the tax credit is very expensive – the state estimates that the PCTC will cost $24.8 million in the 2005-07 budget. In these tight budget times, there are much more effective ways to protect Oregon’s environment and support Oregon businesses.