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Oregon Biodiesel Laws and Incentives


State Incentives

Biofuels Use Tax Credit

A state resident who purchases gasoline blended with 85% ethanol (E85) or biodiesel blends of at least 99% (B99) for use in an alternative fuel vehicle (AFV) qualifies for an income tax credit of $0.50 per gallon, up to $200 for each AFV that is registered in Oregon and owned or leased by the resident. For the purpose of this tax credit, an AFV is a motor vehicle that can operate using E85 or B99. This incentive is applicable for tax years beginning after January 1, 2007, and before January 1, 2013. (Reference House Bill 2210, 2007, and Oregon Revised Statutes 315)

Biofuels Production Property Tax Exemption

Property used to produce biofuels may be eligible for a property tax exemption, provided that it is located in a designated Renewable Energy Development Zone. The Oregon Economic and Community Development Department must receive and approve an application from a qualified rural area to designate the area as a Rural Renewable Energy Development Zone. (Reference House Bill 2210, 2007, and Oregon Revised Statutes 285C.350 and 285C.353)

Alternative Fuel Production Facility and Fueling Infrastructure Tax Credit

Alternative fuel production facilities are eligible for a Business Energy Tax Credit (BETC) of up to 50% of the certified cost of constructing the facility, up to $20 million per project. Only facilities constructed or installed after January 1, 2007, are eligible, and certifications will not be issued after December 31, 2015. A BETC is also available for 25% of the costs incurred for constructing or installing alternative fuel vehicle fueling infrastructure, up to $750 per station. For production facilities and fueling infrastructure, there is an option that allows a project owner to transfer the BETC project eligibility to a pass-through partner for a lump-sum cash payment. A project owner may be a public entity or non-profit organization with no tax liability, or a business with tax liability that chooses to use the pass-through option. (Reference House Bill 3201, 2007, and Oregon Revised Statutes 317.115, 469.160 to 469.180, and 469.185 to 469.225)

Alternative Fuel Loans

The Oregon Department of Energy offers a loan program for energy efficiency, renewable resource, and alternative fuel projects. Eligible alternative fuel projects include fuel production facilities, dedicated feedstock production, fueling stations, and fleet vehicles. The program issues Oregon general obligation bonds to provide funds for the loans. Loan recipients must complete a loan application and pay a loan application fee. (Reference Oregon Revised Statutes 470.050)

Biofuels Production and Distribution Grants - Portland

Through a competitive grant process, the Biofuels Investment Fund (Fund) supports the development of production, storage, blending, and distribution infrastructure for B20 or higher biodiesel blends, and E85 ethanol blends. The Fund also supports non-infrastructure related projects that strongly support Portland's biofuels priorities, including proposals that further the development of Oregon-grown feedstock supply chains.

Portland Biofuels Fueling Infrastructure Grants

The Retail and Fleet Biofuels Infrastructure Grant provides incentives of up to $10,000 to install or convert fueling equipment at retail gasoline stations and fleet fueling sites to B20 or higher biodiesel blends and E85 ethanol blends. Incentives are available on a first-come, first-served basis to projects that meet the grant's eligibility guidelines.

State Laws and Regulations

Renewable Fuels Mandate

All gasoline sold in the state must be blended with 10% ethanol. This requirement goes into effect within three months after retailers are notified by the Oregon Department of Agriculture (ODA) that Oregon ethanol production has reached 40 million gallons per year. Gasoline containing at least 9.2% agriculturally derived ethanol complies with the mandate. The governor may suspend the renewable fuels mandate for ethanol if the Oregon Department of Energy finds that ethanol is not available.

All diesel fuel sold in the state must be blended with 2% biodiesel. This requirement goes into effect within three months after retailers are notified by the ODA that biodiesel production from sources in the Pacific Northwest (consisting of Oregon, Washington, Idaho, and Montana) has reached a level of at least five million gallons on an annualized basis for at least three months. The biodiesel blending requirement increases to 5% when the annual production level reaches at least 15 million gallons on an annualized basis for at least three months. For the purpose of this mandate, biodiesel is defined as a motor vehicle fuel derived from vegetable oil, animal fat, or other non-petroleum resources, that is designated as B100 and complies with American Society for Testing and Materials (ASTM) specification D 6751.

(Reference House Bill 2210 and 3488, 2007, and Oregon Revised Statutes 646)

Biodiesel Quality Testing Procedures

Each biodiesel producer, distributor, or importer must retain the certificate of analysis for each batch or production lot of B100 sold or delivered in the state for at least one year. The Oregon Department of Agriculture (ODA) or authorized agents are permitted to examine these records as necessary. The ODA or authorized agents may perform on-site testing or obtain samples of biodiesel from any producer, bulk facility, or retail location that sells, distributes, transports, hauls, delivers, or stores biodiesel. The related testing cost is the responsibility of the business from which the sample was obtained. (Reference House Bill 2210, 2007, and Oregon Revised Statutes 646.957)

Biofuels Program Impact Studies

The Oregon Department of Energy must conduct periodic impact studies related to the biofuels industry in the state. These studies should evaluate such criteria as: jobs created; current and projected feedstock availability; amount of biofuels blends produced and consumed in the state; cost comparison of biofuels blends and petroleum fuel; environmental impacts; and the extent to which Oregon producers import biofuels or biofuels feedstocks from outside the state. Periodic studies must be conducted between 2009 and 2024. (Reference House Bill 2210, 2007, and Oregon Revised Statutes 318.031)

Global Warming Mitigation Initiative

Governors of Washington, Oregon, and California approved a series of recommendations for action to combat global warming, as detailed in the West Coast Governors' Global Warming Initiative. It was determined that Oregon, California, and Washington must act individually and regionally to reduce greenhouse gases. Oregon's strategy includes the reduction of greenhouse gases within the state's vehicle fleet, in part through the use of alternative and renewable fuels and hybrid electric vehicles. Each Oregon state agency is required to develop and report a greenhouse gas reduction baseline and determine annual reduction targets. Reports to the state Department of Administrative Services must include the volume of ethanol and biodiesel used by agency fleets, as well as any cost savings attributable to driving more fuel-efficient vehicles and using alternative fuels. The Oregon Sustainability Board continues to support these efforts and is assisted by a Sustainability Leadership Team as well as an Interagency Sustainability Network. The governor also appointed a Climate Change Integration Group (CCIG) to continue efforts to address global warming. The CCIG is responsible for tracking the State's progress on greenhouse gas emission reductions and looking at future economic and societal implications of climate change. (Reference Executive Order 06-02, 2006, and Oregon Revised Statutes 184.423)

Alternative Fuel Vehicle (AFV) Acquisition and Fuel Use Requirements

State law requires that all state agencies and transit districts purchase AFVs and use alternative fuels in these vehicles to the maximum extent possible, except when it is not economically or logistically possible to purchase or fuel an AFV. (Reference Oregon Revised Statutes 283.327 and 267.030)

Portland Renewable Fuels Mandate

All gasoline sold within Portland city limits must contain a minimum of 10% ethanol (E10), and diesel fuel must contain a minimum of 5% biodiesel (B5) that meets ASTM D 6751 standards. The diesel blend requirement will increase to 10% biodiesel on July 1, 2010. Fuel vendors must place signage denoting the type of biofuels mixture available for sale. A retailer who offers a biodiesel blend of 20% (B20) or greater is exempt from the requirement and is allowed to provide for sale, on the same site or a contiguous site, diesel fuel that does not contain biodiesel. (Reference Portland Policy Documents ENN-6.02)

Portland Biofuels Use Requirement

All Portland city-owned diesel vehicles must use a minimum B20 biodiesel blend, all city-owned gasoline vehicles must use a minimum of E10 ethanol blended gasoline, and all city-owned flexible-fuel vehicles must use E85. Furthermore, businesses awarded franchises by the city for the collection of solid waste must use B20 biodiesel blends. (Reference Portland Policy Documents ADM-1.12 and Portland Code and Charter 16.60)