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DEQ tells House panel Oregon's Clean Fuels Program is accelerating decarbonization but rural gaps remain
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Summary
DEQ officials told the House Climate, Energy and Environment Committee the Clean Fuels Program has displaced roughly 1 billion gallons of fossil fuels since 2016, reduced greenhouse-gas emissions and funded EV charging and renewable-fuel investments, but program benefits and fuel availability remain uneven outside urban corridors.
The Oregon Department of Environmental Quality told the House Climate, Energy and Environment Committee on Feb. 24 that the state's Clean Fuels Program is accelerating the shift away from liquid fossil fuels but that benefits and fuel options remain uneven across the state.
"Since 2016, the program has supported the displacement of over 1,000,000,000 gallons of fossil fuels," Colin McConaughey, lead for DEQ's greenhouse-gas programs, said during an informational briefing. He told the committee the program has reduced greenhouse-gas emissions by about 16,000,000 tons and helped channel more than $240,000,000 in investments into electric vehicles and charging infrastructure.
DEQ described the program as a credit-and-deficit market tied to gradually stricter carbon-intensity standards. "Those carbon intensity standards are life cycle based," McConaughey said, explaining that importers of dirtier fuels accumulate deficits while producers or importers of cleaner fuels generate credits that can be sold or retired to meet compliance.
Why it matters: the Clean Fuels Program is one of Oregon's primary regulatory tools to lower emissions from the transportation sector, which DEQ and legislators identified as the largest source of the state's greenhouse gases. Committee members pressed DEQ on whether the program increases pump prices, how it interacts with federal vehicle and fuel policies, and whether rural Oregonians are receiving the same benefits as urban residents.
On pricing, DEQ emphasized that its cost estimates are conservative. Using a conservative methodology that assumes the dirtiest allowable replacement fuels, DEQ said the 2024 retail impact equated to roughly 7.5 cents per gallon for E10 gasoline and about 8.5 cents per gallon for B5 diesel. McConaughey contrasted that with other methods, saying an OPIS-based approach that omits ethanol credit values produces an estimate of 8.8 cents per gallon, while applying actual average ethanol carbon intensity for 2024 yields a lower estimate of about 5.9 cents per gallon.
Representative Gamba raised the program's early opponents' warnings that it would add about $1 per gallon to retail prices; McConaughey responded that many exogenous factors (geopolitics, regional disruptions, taxes) drive pump prices and that DEQ had not prepared a direct historical comparison between past disruptions and the program's modeled effects.
DEQ also flagged distributional limits. McConaughey acknowledged that air-quality and public-health improvements "are concentrated in and around urban areas, as well as transportation corridors and transportation hubs," and said alternative fuels and charging remain less available in many rural parts of the state.
Renewable diesel featured in the presentation as a major driver of recent displacement. McConaughey described it as a refinery-scale, drop-in replacement usable at up to 100% in diesel engines and said high-blend renewable diesel has shown "credit values to that fuel, well over a dollar in many cases"—which has encouraged blending and fleet uptake.
Members recounted conflicting user experience. Several legislators described lower fuel mileage and a failed NOx sensor after using renewable diesel in older diesel vehicles; McConaughey said he had not previously heard that pattern and offered to follow up to investigate individual reports.
On the program's timeline and targets, DEQ noted the Clean Fuels standard began in effect in 2016, the initial 10% standard extended through 2025, the 2026 standard is 12%, and the standard is scheduled to ramp to 37% by 2035. DEQ also referenced a governor's executive order directing agencies and the Environmental Quality Commission to consider expanding the standard toward at least 50% by 2040.
The committee did not take formal action on the program; members closed the informational session after roughly an hour of presentation and questions. DEQ staff said they would supply follow-up materials for technical questions and investigate reports of vehicle compatibility issues.
Next steps: DEQ will continue outreach to rural stakeholders, coordinate modeling as federal fuel and vehicle standards evolve, and provide requested follow-up analysis to the committee.
