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Legislature poised to enact new carbon fee

Jerome Rosa, executive director of the Oregon Cattlemen’s Association, recently testified in Salem against imposition of a new fee — 4 cents to more than $1 — at the gas pump to implement the Low Carbon Fuel Standard.

“People from urban areas who support these issues often don’t seem to understand how people in rural areas will be affected,” he said.

“Most of our producers have to drive great distances to move and feed cattle and pick up supplies. If we add costs to these operations, then that makes it harder for them to compete.”

If the fuel standard is extended as expected this week — and followed by a gas tax hike — Rosa is worried about the viability of many small farms. With less than 2 percent of the nation growing food for 326 million Americans – and a fast growing global population – he said it is not the time to make it harder for producers to stay in business.

Rosa is the owner of JER-OSA Organic Dairy and Ponderosa Ranch in Gervais. In his current position, he represents ranchers in Wasco, Sherman, Hood River, and Gilliam counties, as well as across the state.

The low-carbon fuel standard Rosa referenced was championed by former Gov. John Kitzhaber and supported by Democrats to position Oregon as a leader in the effort to reduce global greenhouse gas emissions. The standard was adopted in 2009 but did not take effect until the first of February 2015.

It was set to expire at the end of the year without Legislative action to require that petroleum distributors lower the amount of carbon that gas and diesel emit.

The Department of Environmental Quality will measure carbon intensity to include emissions created while petroleum is extracted, refined, transported and burned anywhere in the world.

Fuel distributors will be given an environmental rating and companies found to have subpar oil will be required to purchase credits from other suppliers whose product is cleaner.

The price will fluctuate with market conditions.

DEQ estimates the low-carbon standard could increase gas prices between 4 and 19 cents per gallon by 2025.

That estimate is based on two studies funded by groups that support the regulation.

Another study commissioned by the Western States Petroleum Association, which opposes the standard, estimates an increase of between 33 cents and $1.06 per gallon.

Jan Meekcoms, executive director of the Oregon Chapter of the National Federation of Independent Business, said companies depend on energy supplies at globally competitive prices to operate effectively.

According to NFIB’s Energy Consumption poll, energy costs are one of the top three expenses in 35 percent of small businesses.

“We need to find energy solutions that work for small businesses,” said Meekcoms.

“Most owners are not able to change business practices fast enough to offset costs that have increased rapidly over the last few years.”

Rep. John Huffman, R-The Dalles, said, for the first time in Oregon history, a tax at the pump – the low-carbon fee – will not be used for transportation-related projects.

“The revenue that is collected will go to the producers of ethanol and other companies that meet the fuel standard, many from out of state,” he said.

Multinational corporations, such as ExxonMobil, BP and Chevron make up 90 percent of Oregon’s oil imports.

Proponents of fuel standard point to California, which enacted the same regulations in 2014, as a success story.

Huffman said the true costs of California’s program are not yet known because it has not yet been fully implemented.

British Columbia, Canada, has a carbon tax of $60 per ton, which some Oregon officials want to follow, with a regular adjustment for inflation.

“The jury’s out on what it will really end up costing,” said Huffman. “And the reality here is that Oregon has a population of 3.9 million and is seeking to reduce its greenhouse gases by 10 percent over the next 10 years.

“This is going to have virtually no impact on the global pollution problem – it’s like killing a gnat with a howitzer.”

Huffman and other Republicans cautioned against adoption of the fuel standard before research has been done on alternative measures.

For example, Oregon State University is developing a device that could be affixed to diesel engines to lessen their pollution output.

“This would be something that could really help improve global pollution,” said Huffman.

He said Democrats, who hold the majority in both the House and Senate, are also considering a gas tax increase of 4 to 6 cents per gallon, which could be combined with a federal tax hike of roughly 12 cents.

Although he is not opposed to investing more money into transportation-related projects, Huffman said it will be hard to support any gas tax increase given that state residents will also be paying the new carbon tax.

He said the cumulative effect on families and businesses has to be considered.


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