The Oregon Environmental Quality Commission voted 4-1 Wednesday to pass new rules that will reduce greenhouse gas emissions from transportation fuels by 10 percent over a decade.
The rules require companies that import fuel into Oregon to reduce the carbon intensity of their fuel mix. That will mean substituting alternative fuels such as biofuel, natural gas, propane or electricity for gasoline and diesel.
The rules create a program similar to the low-carbon fuel standards already in place in California and British Columbia. Washington Gov. Jay Inslee has directed his state Department of Ecology to implement its own version.
The low-carbon fuel plan would allow the state to suspend the rules if there's not enough clean fuel to meet the standard or if the rules trigger excessive prices increases. It also allows companies to buy and sell clean fuel credits on a new, state-regulated marketplace.
Renewable energy companies and environmental groups say the rules will boost the market for cleaner fuels while reducing contributions to climate change. The petroleum industry has been a chief opponent of the new rules, arguing that they will drive up gas prices that there isn't enough low-carbon fuel available to meet the requirements.
Before voting, all five commissioners expressed concern about the potential for negative economic impacts, but most agreed that they support the goal of carbon reduction.
Commissioner Jane O'Keefe voted no on the rules.
"I am worried that there will be jobs lost," she said. "The people who are most vulnerable in this state are the people who are financially vulnerable, people in poverty. I believe they will be the most hit by the economic effects of this rule."
Commissioners Colleen Johnson and Melinda Eden said the final decision on the program really rests with the state Legislature. The state's low-carbon fuel program was created by a bill passed by the 2009 Legislature. It will expire at the end of this year unless lawmakers vote to extend it.
"This is a legislative mandate, if you will, and it's been five, six years," Eden said. "So we're kind of a little slow getting this going, and I agree that if the Legislature wants us not to do this, then the Legislature has the power to change its mind and to end the program down the road."
The new rules are effective Feb. 1, but carbon reduction requirements wouldn't start until 2016. That means in order to meet the 10 percent reduction goal, the Legislature will have to vote this year to remove the 2015 sunset on the program.
Gov. John Kitzhaber has urged the Legislature to lift the sunset, and early last year he directed the the Department of Environmental Quality to move forward with the program – despite the fact that the Legislature hadn't yet voted to extend its lifespan.
Jessica Moskovitz, communications director for the Oregon Environmental Council, says having the new rules in place will make that vote more likely to happen in the next legislative session.
"One of the things that was holding the Legislature back from lifting the sunset in 2013 was the fact that the DEQ hadn't laid out clear rules, so legislators didn't know what they were voting on," she said.
Democrats gained two seats in the state Senate in the November election, which supporters of the low-carbon fuel standard say translate into enough votes to lift the 2015 sunset.