Clean Fuels Standoff Could Put Republicans on Thin Ice

May 14th, 2015 |  Mentions

Originally published by the Portland Business Journal

A demand by Oregon Republicans that the state repeal the Low Carbon Fuel Standard program before they’ll consider a popular transportation package could put the minority party on thin ice with supporters of both issues.

Rep. Mike McLane, House Republican Leader, is the face of the political standoff, which reached a head this week as Oregon Gov. Kate Brown reportedly met with leaders of both houses to potentially water down the LCFS or Clean Fuels program. Her goal: Restart negotiations for a transportation package, which has not advanced since March.

But McLane and the Republican House caucus could face questions from home over the high-stakes stand against the clean fuels program because businesses already are investing in producing biofuels here in Oregon.

Fort Collins, Colorado-based Red Rock Biofuels LLC is pursuing permits for to construct a proposed $200 million plant in Lakeview. While much of its output will be sold to the U.S. military and Southwest Airlines, the investment anticipates demand will soar as states such as Oregon, Washington and California tamp down the carbon content of transportation fuels.

Terry Kulesa, Red Rock’s co-founder and president, was bemused to hear Oregon is thinking about “messing up” a program it approved just two months ago.

“Is there a Republican representing Lakeview?” he asked. “I’d ask the Lakeview representative, ‘Why wouldn’t you support the plant in your district?’”

Lake County is covered by House Districts 59 and 60, with Lakeview on the border. Both representatives are Republicans. Rep. Gail Whitsett of Klamath Falls wasn’t available. The office of Rep. Cliff Bentz, of Ontario, referred questions to the House Republican leadership.

Kara Walker, spokeswoman for House Republicans, defended putting transportation ahead of clean fuels.

“Transportation and infrastructure is the top priority and should be the top priority over the Low Carbon Fuel Standard,” she said.

The standoff between clean fuels and transportation illustrates just how vulnerable the party’s position is.

The clean fuels program is touted as a potential economic engine for rural communities that could attract more investors like Red Rock while a transportation package would reinvest Oregon tax dollars in the state’s roads and bridges, providing an economic boost of a different sort.

For his part, Kulesa said the Red Rock project will proceed. But if Oregon alters the rules, its output will likely head to California, Washington and/or British Columbia.

“Any renewable power is going to flow where it gets the best return. That’s just Business 101,” he said. “It’s going to flow to who wants it the most.”

Red Rock isn’t the only business investing in Oregon in part because of the Clean Fuels law. Tuesday, Eugene-based SeQuential Pacific Biofuels said it expanded the capacity of its refinery, which converts used cooking oil into transportation fuel, by 20 percent, a direct result of the bill.

Tyson Keever, founder and president, was traveling and unavailable to talk, but the company issued a statement calling on the state to leave the program alone.

“We support the clean fuels program. It aligns with our business model by placing a high value on fuels with lower carbon footprints. Moreover, it provides the infrastructure necessary to promote diversity and growth in the local clean fuels market. We hope the program remains intact.”

Republicans could be vulnerable on the transportation front as well.

Some 44 Oregon mayors have signed a letter encouraging lawmakers to pass a package. It’s widely supported by groups ranging from the Portland Business Alliance to the Oregon Loggers Association. The last transportation package was approved in 2009 — ironically, the same year the Low Carbon Fuel Standard was first authorized.

A transportation package will require a super-majority vote in both houses to pass. Democrats hold a super-majority in the Senate but need one Republican vote in the House. The Republican caucus has said it is standing firm on its demand for a repeal, saying the Clean Fuels program won’t meet its goal of reducing transportation emissions by 10 percent.

Alex Wall, a business attorney and director of the Oregon chapter of Environmental Entrepreneurs, which advocated for clean fuels, said it’s foolish to pit the two against one another. Together, transportation and clean fuels will result in cleaner air, jobs and investment, he said.

“These things are not mutually exclusive,” he said. “Politically, I think they’re going to be on the wrong side of history.”