Low-Carbon Transportation for Oregon John Galloway Program Director Oregon Environmental Council

1. Low-Carbon Transportation for OregonJohn GallowayProgram DirectorOregon Environmental Council Presentation to JELL Symposium 10/10/08

2. Oregon Environmental Council • Celebrating our 40th anniversary this year • We work to: • Slow global warming • Protect kids’ health from toxic pollution • Clean up Oregon’s rivers • Promote healthy food and farms • Build a sustainable economy

3. Fuels Policies: Current • Renewable Fuels Standard • Statewide standard adopted 2007, currently in roll-out • E10 (10% ethanol) and B2 / B5 (biodiesel blends) • Portland just celebrated one-year anniversary of its RFS • Federal RFS: 36 billion gallons by 2022 • Financial Incentives for Biofuels Feedstock and Fuel Producers • State: Feedstock incentives, BETC, property tax exemptions • Federal: loan guarantees, blender credits

4. Broader Fuel Policies: Future • Low-Carbon Fuels Standard • Reduce carbon in transportation fuels 10% by 2020 • Including transportation fuels in Carbon Cap and Trade • Most focus to date has instead been on advanced vehicle technology (e.g. plug-in hybrids, EVs, fuel cells)

5. Attempted Policy: Clean Cars Standard • Also referred to informally as the “tailpipe emissions standard” (for GHGs) • Would limit GHG emissions from cars • Adopted by West Coast states + 12 other states + interest from 3 additional states; represent over 40% of new car market • Challenged in courts by auto manufacturers on basis of federal preemption under Clean Air Act (EPA authority regulating GHGs) • Auto makers make administrative claims that standard is too costly to meet

6. Attempted Policy: Clean Cars Standard • Follow-on suit by California, joined by other 14 states that adopted the standard, based on undue harm in delay of waiver • Dec ’07: EPA indicates intent to deny waiver, formally denied Feb ’08 • CA + 16 states (including OR) file suit challenging merits of EPA decision • Congressional inquiry finds EPA administrator, Stephen Johnson, ignored unilateral recommendations from his legal and technical staff to grant CA’s waiver

7. Low-Carbon Fuel Standard(LCFS) • Reduce the average fuel carbon intensity of transportation fuels by 10 percent by year 2020 • Spurs providers of transportation fuels to bring more climate-friendly fuels to market • Adopted by CA in Executive Order and implemented as part of its Global Warming Solutions Act • CA rules adopted this year, in effect 2009, phase-in period between 2010 and 2019 • Adopted in British Columbia; Washington may consider in its upcoming legislative session • OR likely to consider in Global Warming legislation

8. LCFS: Advantages • Substantially reduce global warming pollution and create a sustainable and growing market for cleaner fuels • Cleaner production and less air pollution • Follow a different fuels path than petroleum industry is setting, which includes highly polluting domestic resources such as fuel from coal-to-liquids, tar sands and oil shale

9. Alternatives? (Alberta Tar Sands)

10. LCFS: Challenges • Need for interim milestones to drive technological innovation and development of lower-cost solutions • Accounting for land use changes: direct and indirect • Modeling variety of fuel sources to accurately determine carbon intensity • Concerns about regulatory certainty

11. Transportation Policies Overview • 2009 legislation may consider funding upgrades to infrastructure, demand-side pilot programs, and climate change in planning process • Transportation sector accounts for nearly 40% of Oregon’s GHG emissions • Need to reduce vehicle-miles traveled

12. Transportation Policies Overview • Revenue • Gas tax revenues and vehicle fees dedicated by OR Constitution (Article IX, section 3a) to public highways, roads, and streets (with limited exceptions) • Example of new mechanisms: New car title fees, increasing gas tax and registration fees, increase lottery revenue portion by 7%, allocating federal Surface Transp. Program funds to transit, 0.1% increase in employer payroll tax

13. Transportation:Usage-based Fees • PAYD: Pay As You Drive Insurance • “Per mile” user fees • Could replace gas tax • ODOT pilot program demonstrated system is inexpensive but not ready for commercial use • May raise privacy concerns • Congestion pricing • Typically applied in high-traffic corridors and/or inner urban congestion zones • Carrots vs. sticks: untapped incentives?

14. OEC’s Next Steps • Secure a Low-Carbon Fuel Standard in Oregon and establish a “West Coast low-carbon fuels corridor” • Promoting fuel cap & trade as part of Western Climate Initiative and Oregon policy • Ensure Renewable Fuels Standard remains in place and achieves intended goals • Ensure passage of environmentally sound transportation policies in 2009 session

16. Thank You! John Galloway Program Director (503)222-1963 Ext. 117 johng@oeconline.org

17. Extra Slides

18. Markets for Diesel and Gasoline Gasoline Diesel Gallons consumed in U.S. in 2002 ~110 billion ~57 billion Gallons consumed in Oregon each year ~1.4 billion ~720 million Gallons consumed in Oregon each day ~4 million ~2 million Source: SeQuential Biofuels