May Newsletter
Oregon Biofuels Legislation Awaits Action

Two key pieces of legislation introduced by Oregon Rep. Jeff Kropf are about to emerge from committee on their way to a floor vote. The first, now folded into SB 231A, would expand Oregon's current five-year, 50% property tax exemption on ethanol plants to include biodiesel, biolubricant and oilseed crushing plants. New facilities would be able to apply for a ten-year exemption subject to the approval of 75% of the affected local taxing districts. The second, HB 2652, would extend a pollution control income tax credit to cover the costs of equipment for production of biofuels and biolubricants. It would also cover up to 50% of the costs, in contrast to 35% with the current tax credit.

The bills resulted from the work of the Oregon Legislative Task Force on Biofuels, convened by Rep. Jeff Kropf, Chair of the House Agriculture & Natural Resources Committee and Sen. Kurt Schrader, co-chair of the Senate Ways & Means Committee. The Task Force investigated the potential for and the means to develop an ethanol and biodiesel production industry in Oregon, providing legislators with an in-depth picture of the economic, environmental, and social benefits of biofuels production and of the favorable academic and institutional resources that exist in the Northwest.

The Task Force was briefed on the technologies, chemistry, and on-farm economics of biofuels, and it examined the challenges of capitalizing on the opportunities in terms of developing and financing production facilities that would turn agricultural crops and by-products into biofuels. And it explored policy incentives and mechanisms that can catalyze the industry, such as "the Minnesota model" as a case study for growing an in-state ethanol industry. For more on the Minnesota Model, review these publications:

• The Minnesota Ethanol Program
  
• The Ethanol Industry in Minnesota
  

The Task Force also learned about federal policies that can be leveraged to benefit an Oregon biofuels industry - for example, EPA has mandated that ultra low sulfur diesel be the standard on-road diesel fuel by 2006 which Oregon could meet by mandating a 2% biodiesel blend as diesel fuel's lubricity additive. According to Tomas Endicott of SeQuential Biofuels LLC, such a 2% mandate in Oregon would create a market for approximately 15 million gallons of biodiesel per year--roughly the size of a viable commercial production facility.

Look for an update on the status of these important initiatives in the next edition of the Harvesting Clean Energy bulletin.