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Carbon credits don't equal pollution reduction

Existing alternative fuel facilities will get new carbon credits

Supporters of Oregon’s low-carbon fuel standard offered a simple promise as lawmakers considered legislation to make the program permanent earlier this year.

The standard would reduce carbon emissions from transportation fuel in the state by 10 percent over the next decade, through a combination of cleaner biofuels blended into gas and diesel, as well as credits to incentivize alternatives such as propane-fueled vehicles. In written testimony echoed by other supporters, Rikki Seguin with the group Environment Oregon called for lawmakers to support the fuel standard because it would result in “10 percent less carbon pollution from transportation fuels over 10 years.”

Now, as companies and governments prepare to sign up to generate and sell carbon credits through the program, the state and supporters of the standard acknowledge Oregon might never meet that 10 percent goal. That is because the program allows owners to count existing alternative fuel stations — including hundreds of electric vehicle charging stations and dozens of propane vehicle fueling stations — as if as if they’re producing new carbon reductions when the state begins awarding carbon credits in 2016.

For the companies and governments that own those stations, Oregon will provide a reward for something they were already doing, rather than a new reduction in pollution. It’s another potential benefit for projects that were already eligible to receive other state support, such as energy tax credits.

Starting next year, transportation fuel importers and producers in Oregon will receive credits from the state that reflect the total carbon emissions during the life cycle of a particular fuel, from extraction and processing through combustion. Companies, governments and other entities that offer fuel with carbon content below the state standard for a particular year can generate credits to sell to other fuel importers and producers, who need credits to offset dirtier fuels.

“A credit is simply proof of that pollution reduction,” said Jana Gastellum, climate program director at the Oregon Environmental Council. “Credits are really how the program works, in a sense. All types of different low-carbon fuels can generate credits.”

Oregon lawmakers passed a low-carbon fuels bill in 2009, but the Department of Environmental Quality had not implemented it. The program was set to sunset this year, until lawmakers passed legislation to make it permanent.

Fuel producers and truckers have filed a lawsuit to stop Oregon from implementing the low-carbon fuel standard, and the Western States Petroleum Association also is challenging it at the Oregon Court of Appeals.

Existing alternative-fuel providers qualify for credits under the program because the state agency administering the program, the Oregon Department of Environmental Quality, did not include them when it calculated the 2010 baseline for the 10 percent carbon reduction. Cory-Ann Wind, an air quality manager for the Department of Environmental Quality who works on implementation of the low-carbon fuels program, said alternative fuels were such a small portion of the market that it did not make sense to go through the complex calculations necessary to include them in the baseline.

“The major consideration was that the alternatives were used so little in 2010 that it didn’t make sense to put a lot of effort into quantifying it,” Wind wrote in an email in late April. “In other words, even if we did factor it in, the change to the baseline would be indistinguishable.”

It is unclear whether this is true, since DEQ never calculated the potential impact from awarding credit to existing fuel providers.

According to the U.S. Department of Energy, there are at least 384 electric vehicle charging stations available for public use in Oregon, 37 public propane stations, 22 stations with at least 20 percent biodiesel, four compressed natural gas stations, five stations with 85 percent ethanol fuel, and one liquefied natural gas station. There are additional private stations used by the governments and companies that operate them.

Gastellum said some organizations have used these fuels to run their vehicles for years, such as Schwann’s Home Delivery and Franz Bakery. Other more recent adopters include Willamette Valley Medical Transport and the Polk County Sheriff’s Office, which began to convert 10 patrol cars to run on propane in 2013. In Salem, a portion of the Cherriots public bus fleet runs on compressed natural gas.

The station owners who fuel these fleets can generate credits to sell starting next year, even if they reduce carbon emissions by the same — or lower — amounts than in previous years. Those credits will count toward Oregon’s goal to reduce carbon emissions by 10 percent.

Gastellum agreed with Wind that allowing existing alternative-fuel providers to receive carbon credits will have a minimal impact on Oregon’s ability to reach the 10 percent carbon reduction goal.

“It’s pretty small,” Gastellum said of this sector of the Oregon transportation fuels market. “... It’s a good start, but it’s not going to get you 5 percent reduction already. I think it’s OK to reward some of those early actors in this case, because I think if it were a significant share, DEQ really would have looked into that.”