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Clearing The Air On A Low-Carbon Fuel Standard

Date: July 23, 2014

Oregonians for Sound Fuel Policy Guest Editorial

By Nick Smith

As Oregonians we all value a healthy environment, but a state Low Carbon Fuel Standard (LCFS) being proposed by some would have no measurable impact on global warming. None.

 Its impact on our state’s economy, however, would be significant—and terrible.

Thanks to existing programs like the U.S. Environmental Protection Agency’s and Oregon’s state Renewable Fuel Standards (RFS), Oregon is already one of the lowest per capita CO2 emitters in the nation. According to a recent study by Charles River Associates, we are blending 170 million gallons of ethanol and 60 million gallons of biodiesel per year to successfully reduce carbon fuel emissions.

The only effect a LCFS would have, then, would be to expose Oregonians to volatile price increases at the pump and do extreme damage to working families, consumers and job growth.

The LCFS proposal would require fuel providers to ration traditional fuels and replace them with expensive, frequently imported biofuels that won’t exist in commercial quantities for many years.

By mandating products in short supply, the LCFS would mean higher fuel and transportation costs for small businesses and potentially higher prices for consumers, which is why a similar law in California was recently declared infeasible by the Boston Consulting Group (BCG). Nonetheless, the state of Oregon continues its work to implement the law in our state. Small-business owners should be aware of the mandate’s potential impacts, and speak up as the Oregon Environmental Quality Commission considers adopting LCFS rules in November.

BCG also found that a LCFS mandate could increase the cost of fuel by an estimated $1 or more per gallon. This would hurt working Oregonians the most, as research indicates such a law could cost the average family up to $1,280 per year.

Additionally, an economic impact study by Charles River Associates shows a LCFS could result in the loss of as many as 29,000 jobs in Oregon, by forcing many small businesses to cut costs, defer hiring or increase their prices and become less competitive than businesses operating outside of the state.

That’s why the Oregon arm of the National Federation of Independent Business, which has more than 7,000 small-business members in the state, has joined Oregonians for Sound Fuel Policy in standing up to the LCFS proposal.

Oregonians for Sound Fuel Policy is a broad coalition of labor, businesses, contractors, transportation firms, farmers and ranchers. The group shares the goal of reducing Oregon’s greenhouse gas emissions but believes the limited reductions in emissions under the LCFS are not worth the cost to the state’s economy.

Why punish consumers and businesses that have already made significant contributions in the reduction of greenhouse gas emissions through energy efficiency programs, wiser choices in vehicles and adoption of alternative transport modes and technologies?

Small businesses are the backbone of Oregon’s economy, accounting for 98 percent of all employers who provide jobs for 56 percent of the private-sector labor force, according to the U.S. Small Business Administration’s Office of Advocacy.

As with any new or higher tax or regulation, they would bear the brunt of a LCFS. By nature, small businesses operate on tight margins. Many struggle to keep employees and pay their vendors while keeping prices reasonable for customers.

The proposed Low Carbon Fuel Standard would only make it harder for many small businesses to survive in today’s economy, while making it more difficult for Oregon families to meet their everyday needs.

Oregonians for Sound Fuel Policy has a message state legislators need to hear, and working with small business’ leading representative association, among many others, the volume in increasing: A Low Carbon Fuel Standard is bad for working families, bad for consumers, bad for job growth, and does nothing substantive for the environment.

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Nick Smith is small-business coordinator for Oregonians for Sound Fuel Policy.

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By mandating products in short supply, the LCFS would mean higher fuel and transportation costs for small businesses and potentially higher prices for consumers, which is why a similar law in California was recently declared infeasible

Nick Smith is small-business coordinator for Oregonians For Sound Fuel Policy.

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