Oregon must find a way to stick out from a crowding low-carbon marketplace to meet increasingly aggressive reduction targets under a rulemaking underway this year.
The state will need an influx of renewable diesel supplies to help satisfy Clean Fuels Program obligations this decade and rising electric transportation adoption to balance mandates in the next. But advisers warned that Oregon had little control over such supply decisions as they worked with regulators to set targets.
The Oregon Department of Environmental Quality discussed working projections of fuel supplies as a rulemaking advisory committee began contemplating how to meet directions to cut state road fuel carbon by at least 50pc by 2040. Initial sketches of how the state could meet that target required renewable diesel and biodiesel to fill 85pc of the state's liquid diesel demand by 2040. Both fuels combined for about 43pc of the state's diesel pool in the first quarter, with a third of the pool filled by renewable diesel.
Initial assumptions included ethanol blending into gasoline rising to 15pc, and the carbon intensity of that blendstock falling with the use of carbon capture and sequestration attached to ethanol facilities.
The active rulemaking would use the Clean Fuels Program support for electric vehicle adoption. Oregon could expand credits given in advance to spur electric charging infrastructure installation, require the revenues from largest source of program charging credits be spent on encouraging electric vehicle adoption and increase the carbon reduction — and thus credit-generation — attributed to electric vehicle use.
"We do need increased EV sales in order to hit deeper targets for the program, and that will require some additional help that we need to do that, especially given the broader policy landscape around EVs," Department of Environmental Quality Clean Fuels Program manager Bill Peters said.
Low-carbon fuel standards (LCFS) require yearly reductions of road fuel carbon intensity. Suppliers of higher-carbon fuels exceeding annual limits incur deficits they must offset with credits generated from the distribution to the market of approved, lower-carbon alternatives.
Governor Tina Kotek (D) last November directed the department to update rules with a 50pc reduction target by 2040, among other changes. The program today targets a 37.5 reduction by 2035.
Oregon's success in meeting its targets depends largely on decisions outside its borders. The state hosts no active renewable diesel production capacity. Renewable diesel deliveries shrank in 2024 and 2025 as spot credit prices tumbled toward $20/t. Rising deliveries seen in the second half of last year and early this year followed a return above $100/t — or more than 10¢/USG passed through to gasoline — in July 2025.
"There's just such a whiplashing of the supply based on price," said Nick Staub of fuel distributor Ed Staub and Sons. "We are not in control of our own supply — we are at the mercy of other states supplying us."
The rulemaking must also grapple with assumptions about the pace of battery electric and plug-in hybrid vehicle adoption in Oregon. The state followed California regulations requiring increased electric vehicle offerings that are now targeted by the US Congress for revocation.
The state's rulemaking advisory committee will meet next in November. Public comment on the initial fuel modeling and electric transportation strategies will continue to 25 September.
