What we can learn from Oregon’s low-carbon fuel law

As part of his proposals to reduce Washington CO2 emissions, the Governor included a low-carbon fuel standard (LCFS), designed to reduce transportation emissions. Oregon enacted a similar policy recently and it has been cited as evidence that the new restrictions won’t cost much at the pump.

When assessing the policy, we need not only look at what it is likely to cost, but how effective it is at achieving the goal. …

Using data provided by the state of Oregon, a low-carbon fuel standard is relatively expensive, having a high cost for small amounts of CO2 reduction. It costs about ten times as much to reduce CO2 using an LCFS as is currently being paid in the cap-and-trade system in the Northeast U.S.

According to the Oregon Department of Environmental Quality, the LCFS added one-quarter of a cent (0.23 cents) per gallon in 2017. This reduced the CO2 content of a gallon of E10 by 0.5 percent. At that price, it costs $58.46 to reduce one metric ton (MT) of CO2. …

The price of Oregon’s LCFS, however, is increasing and has more than doubled in the past year. Oregon’s requirements are increasing, making it more difficult to meet the rule. In 2018, the LCFS is supposed to reduce the CO2 emissions per gallon by one percent, double the 2017 rate. As a result, the cost has more than doubled …

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