After a fight over greenhouse gas emissions of the Oregon Legislature鈥檚 ability to function for two consecutive sessions, the issue has been largely absent in 2021.
Now, that鈥檚 beginning to change.
In the last week, House Democrats have unveiled big proposals to address air pollution and carbon emissions from diesel fuel in Oregon. Those bills have received blowback from Republican lawmakers and industry groups, calling to mind the dynamic that has repeatedly led Republicans to shut down the Legislature by fleeing the state.
One bill, , would set a staggered timeline for ending sales of diesel in the state 鈥� first in the Portland area, then throughout Oregon. Its backers hope to spur widespread use of 鈥渞enewable diesel,鈥� a product with that can be used in any diesel engine. They say the fuel could be an important and near-instant way for the state to cut into greenhouse gas emissions while other technologies emerge.
But the state鈥檚 trucking industry and allied lawmakers strongly oppose any mandate, worrying that supply of the renewable fuel won鈥檛 be enough to meet its needs.
Another proposal has appeared in the form of a to an otherwise unremarkable bill, . Using what鈥檚 known as a 鈥済ut-and-stuff鈥� amendment to completely replace the bill鈥檚 contents, state Rep. Rob Nosse, D-Portland, is proposing an array of new taxes on logging, construction and farming equipment, along with the 鈥渙ff-road鈥� diesel they use. The money from the tax would be used to help swap out older diesel engines with cleaner-running models, Nosse says.
The group Timber Unity, which has staged large rallies in Salem to combat bills that would hike taxes on its members, is a counter-attack.
Sponsors of the bills acknowledge their future is unclear. The twin crises of wildfire recovery and COVID-19 are demanding a lot of attention this year, and lawmakers also have to craft a balanced budget and redraw the state鈥檚 political boundaries. Meanwhile, an executive order issued last year by Gov. Kate Brown set goals for reducing greenhouse gas emissions.
But the proposals also send a clear signal that Democrats are not abandoning efforts to fight climate change and sources of unhealthy air pollution, despite a series of high-profile setbacks to a cap-and-trade proposal in 2019 and 2020.
In 2007, the Legislature set a goal that Oregon would decrease its greenhouse gas emissions 10% below 1990 levels by 2020. In 2019, the state 1990 levels.
鈥淲e still need to reduce our greenhouse gas emissions and there鈥檚 still a lot of emphasis on that this session,鈥� House Speaker Tina Kotek, D-Portland, said Monday. 鈥淭hat crisis hasn鈥檛 left us, either. It鈥檚 still there.鈥�
A "magic juice" mandate
The bill to phase out diesel sales in the state was introduced by state Rep. Karin Power, D-Milwaukie, who played a leading role in the cap-and-trade fights in recent years. But the bill is the brainchild of Keith Wilson, president of Portland-based trucking company Titan Freight Systems.
Wilson has long broken ranks with others in his industry over proposals to fight climate change, notably supporting the cap-and-trade proposal that was loathed by the Oregon Trucking Association. Now he wants to swap the fuel his industry relies on for another option.
Under HB 3305, sales of petroleum diesel would be phased out by industry and geographic region over the course of six years. Beginning in 2023, government fleets and government contractors in the tri-county Portland region wouldn鈥檛 be allowed to use the fuel. The next year, diesel sales would end for commercial truckers in the region, followed by other consumers in 2025.
Beginning in 2026, the process would start anew in the rest of the state. By 2028, petroleum diesel sales would be phased out altogether.
For Wilson and Power, the proposal is not as dramatic as it sounds. They insist so-called renewable diesel presents a cleaner, comparably priced alternative that could actually save Oregon trucking outfits money over time. By phasing out petroleum diesel, they believe, Oregon will create enough demand to bring more of its renewable counterpart to the state.
鈥淭his isn鈥檛 an energy war,鈥� Power said. 鈥淚t鈥檚 setting an amazing goal. It would continue to put Oregon at the forefront of adopting proven ways to reduce carbon emissions and clean up local air pollution.鈥�
Discussions about renewable diesel can begin to seem fanciful. People interviewed for this story variously called it 鈥渁 unicorn,鈥� 鈥渕agic juice鈥� and 鈥渓iquid gold.鈥�
The fuel isn鈥檛 the biodiesel you鈥檝e likely heard of. Renewable diesel has the same chemical makeup as petroleum-based diesel, meaning it can be put into any diesel engine with no change in functionality other than to burn more cleanly. And it鈥檚 made not from fossil fuel, but renewable sources like animal fats and used cooking oils.
Over the lifecycle of renewable diesel 鈥� a figure that takes into account not only production and use but the transportation required to get the fuel to market 鈥� the it has a carbon intensity between 15% and 80% below normal diesel fuel. In other words, it can generate the same amount of power as regular diesel with much fewer overall emissions.
The catch is that renewable diesel is also less abundant and more expensive to produce than petroleum diesel. Thanks to state subsidies from Oregon鈥檚 , along with federal incentives, companies can currently market it in the state at a similar price 鈥� at least in the Portland area.
For Wilson, who says he uses renewable diesel for more than half of the miles his trucks drive in three states, the change has been a money saver. In a presentation he鈥檚 ready to deliver at a moment鈥檚 notice, Wilson explains how a goal to reduce his company鈥檚 emissions by 20% in a decade fell far short: a 5% drop in nine years.
鈥淭hat鈥檚 despite replacing every single one of my tractors, every single one of my trailers and adding almost every aftermarket fuel efficiency-saving piece of equipment.,鈥� Wilson said. The failure led him to try renewable diesel roughly a year ago, with instant results.
By locking in a favorable rate, Wilson says he pays the same amount for a gallon of renewable diesel as he would a gallon of normal diesel. But because the fuel burns more cleanly, he鈥檚 saved money on oil changes and exhaust system maintenance. According to figures he acknowledges are rough, Wilson says he saved nearly $21,000 in the last year running renewable diesel. He also believes Titan emitted nearly 1,300 fewer metric tons of CO2: a 34% reduction in one year.
Using those calculations, Wilson believes the trucking industry throughout the state could save $135 million if it were able to switch over to renewable diesel at the same cost-neutral price per gallon as he has and slash emissions by nearly 6 million metric tons a year.
鈥淎ll of these benefits at no cost,鈥� he says. 鈥淎ll we have to do is change our energy source and Oregonians continue business as usual.鈥�
A question of supply
Others in Wilson鈥檚 industry aren鈥檛 convinced. Jana Jarvis, executive director of the Oregon Trucking Association says her group is opposed to any bill that would require a switch to another kind of fuel. She believes that, if renewable diesel is as good as Wilson claims, the market will make room.
Jarvis also doesn鈥檛 believe there鈥檚 enough renewable diesel to satisfy Oregon鈥檚 needs. And she notes that there鈥檚 not currently a cost-effective way to get the fuel to southern and eastern Oregon.
鈥淢any of our members are very interested in moving in that direction, but there鈥檚 no supply,鈥� she said. 鈥淚t鈥檚 questionable why we would try to mandate a product in short supply.鈥�
The question of supply is somewhat tricky. Wilson points to that suggests as much as 517 million gallons of renewable diesel are available to Oregon in 2021, an amount that would cover the vast majority of the state鈥檚 diesel use.
But that 517 million figure suggests only the total amount of fuel that could be available in Oregon in the most favorable circumstances, not the amount sitting ready to make its way here. Cory-Ann Wind, manager of the Oregon Clean Fuels Program, notes that most renewable diesel in the US flows to California, which offers more generous subsidies for low-carbon fuels. Oregon is currently the only other state with a similar policy, so it does attract some renewable diesel.
鈥淚s there enough renewable diesel right now to satisfy everyone鈥檚 demand?鈥� Wind said. 鈥淣o. It鈥檚 an emerging market and as more people find out about it, there鈥檚 more interest.鈥�
There鈥檚 also a lot more of the fuel on the way. Major oil producers like Valero and Phillips 66 have announced initiatives to produce more renewable diesel in the last year. that, by one estimate, production of the fuel is expected to increase 500% in the next three years.
And one of the largest renewable diesel refineries in the world could be headed to Oregon. A proposed facility in Clatskanie would produce around 600 million gallons a year by 2024.
鈥淚 really tell anyone who will listen: You want to have this stuff in Oregon,鈥� said Chris Efird, executive chairman of Next Renewable Fuels, the Texas-based company proposing the refinery.
But even the possible emergence of a major refinery in Oregon doesn鈥檛 mean the state is necessarily going to be drowning in renewable diesel. 鈥淥ne hundred percent of our production is already spoken for with our customers,鈥� Efird said, noting that Shell Oil is one of the companies he plans to sell fuel to. 鈥淪hell is going to be selling to people it sells to. We are not going to go take a truck to a local gas station.鈥�
Wilson and Power believe that the increased demand brought by their bill will bring more supply to the state. The bill would also require Oregon鈥檚 Department of Environmental Quality and Department of Agriculture to study whether enough renewable diesel is available to make the proposal work. Wilson said he would build in 鈥渙ff-ramps鈥� if enough renewable diesel isn鈥檛 available at a cost-neutral price.
The uncertainties, meanwhile, have prompted a harsh response from some lawmakers.
鈥淚f renewable diesel is viable, available and is cost-effective, there will be no need for any legislation,鈥� said State Rep. Shelly Boshart Davis, R-Albany, who owns a trucking business. 鈥淚 am always available for a conversation about fuel sources and would welcome one about renewable diesel outside of this session. This bill being dropped into the most unprecedented and very limited sessions we鈥檝e ever experienced was very surprising.鈥�
Boshart Davis and other House Republicans issued a press release in early March blasting the proposal as a 鈥渨ar on the working class鈥� and claiming it would 鈥渃ripple Oregon鈥檚 economy by effectively banning entire industries from operating altogether.鈥� The release made no mention of renewable diesel as a possible alternative.
While the future of Wilson鈥檚 proposal is unclear in the Legislature, he appears to have a backstop in mind. According to a lobbyist for Titan Freight Systems, the idea could well appear before Portland-area voters as a ballot measure if it fails to win over lawmakers.
A "super-aggressive" approach
As contentious as Power鈥檚 bill could prove this session, Nosse鈥檚 tax bill would likely draw more opposition.
The amendment the lawmaker proposed would create a series of new taxes he says will raise nearly $30 million a year 鈥� money that would go to a state fund to help swap out or retrofit older, high-polluting diesel engines. Taxes created under the bill include a 3% tax on tire sales, a tax on sales and rentals of off-road diesel equipment, a privilege tax on new heavy-duty vehicles, and a tax on 鈥渘on-road鈥� diesel used in logging, farming and construction equipment. The fuel, dyed-red to differentiate it from diesel sold for highway use, is .
Nosse鈥檚 bill emerged from the work of a legislative task force created in 2019 after the Legislature passed a bill aimed at in the Portland region. The task force was charged with figuring out how the state might generate money to help businesses speed up the switch to cleaner-burning engines, and so reduce the hazards of greenhouse gases and harmful soot associated with older models.
In a , the task force identified five potential new revenue sources. Nosse鈥檚 proposal includes four of them.
鈥淢y bill is super aggressive,鈥� the lawmaker conceded recently. 鈥淭he way that this kind of works is there鈥檚 only so many tax votes that we can take. Maybe this is one of them that we鈥檒l take but I think it鈥檚 too early to tell right now.鈥�
The bill would require Nosse and his allies to muster the full weight of Democrats鈥� supermajorities in the House and Senate if the bill were to pass without Republican support. A bill to create taxes requires a three-fifths vote, meaning no more than one Democratic defection in the House, and none in the Senate.
Opponents aren鈥檛 taking any chances. The group Timber Unity, formed in part to oppose fuel increases that would have come with Democrats鈥� failed cap-and-trade proposal, wasted no time circulating Nosse鈥檚 amendment to its members.
The House Committee on Energy and Environment was so inundated with testimony opposing the bill that it pushed back a planned hearing on Nosse鈥檚 amendment last week. A makeup date has not been scheduled.
In a press release, Timber Unity board president Mike Pihl, a logging company owner, said the bill was a sneak attack.
鈥淚t鈥檚 pretty outrageous that the Legislature, while the session is largely locked down from public engagement, would use these tactics of gutting and stuffing bills in hopes nobody would notice a hefty tax hike, especially on those of us who are directly impacted and have limited access to the technology to access our legislators this session,鈥� Pihl said in a statement.
Many others have lined up in opposition.
鈥淚t鈥檚 fundamentally unfair to saddle farm and ranch families with the cost of retrofitting Portland鈥檚 fleets or cleaning up Portland鈥檚 airshed,鈥� Klamath County farmer Rodney Cheyne wrote in testimony opposing the bill. 鈥淵our [agriculture] industry and those transporting our goods, are the backbone of this Country. To implement taxes that would cripple both would skyrocket the costs of our products or put many of us out of business, leaving supply shortages.鈥�
Meanwhile, the bill has supporters among air quality advocates and other groups, like the League of Women Voters of Oregon.
鈥淭he number of older diesel engines found to be currently in the on-road and off-road fleets has been surprising and daunting, and transitioning older equipment to newer, cleaner models can be incredibly expensive,鈥� the League wrote in testimony supporting the bill. 鈥淚t is essential that new funding strategies be developed to support businesses in upgrading their fleets and addressing diesel emissions statewide.鈥�
