Biofuels package clears last hurdle in Legislature


Lawmakers on Thursday passed a series of renewable energy bills that they hope will place Oregon at the forefront of the nation's burgeoning biofuels industry.

The legislation provides incentives and tax breaks for farmers to grow crops such as canola seeds and flax that can be turned into motor fuel. Once regional and in-state mandates are reached, petroleum distributors will be required to blend the homegrown additives into gasoline and diesel fuels.

Private equity is increasingly flowing to states that establish themselves as leaders in the growing clean energy, low carbon economy. And with rising gas prices and a 50-cent per gallon federal subsidy, locally grown biofuels represent an increasingly attractive alternative to fossil fuels for many governments.

"We are poised to compete nationally to produce these alternative fuels," said Sen. Brad Avakian, D-Portland, a chief supporter of the bill. "It moves us toward greater energy independence, makes us less reliant on foreign fuel sources and keeps dollars invested in the state."

Nearly $800 million of venture capital was invested in biofuels in the U.S. between 2002 and 2007, according to Cleantech Network, a Boston-based research company that tracks venture capital.

Oregon produces about — million gallons of biofuels each year, but that amount is expected to skyrocket over the next few years as farmers and producers capitalize on a variety of tax breaks and incentives created by the legislation.

"My guesstimate is 100 million gallons per year by 2010 and 500 million gallons by 2020," said Kevin Considine, a program director at the Oregon Environmental Council.

Although proponents said the Oregon biofuels legislation was some of the most aggressive in the country, the state is hardly alone in its drive to capture investment. Twenty-two other states have passed legislation that include either producer or retailer incentives for renewable fuels.

Minnesota passed the nation's first biofuel requirement in the early 1990s and is projected to produce 620 million gallons of ethanol in 2007, leading to 11,444 jobs and over $3 billion in revenue, according to the state's department of agriculture.

Under Oregon's bill, once in-state production of ethanol reaches 40 million gallons, petroleum distributors will be required to sell gasoline that contains at least 10 percent of the biofuel. A similar production target for biodiesel feedstocks will trigger a mandatory 2 percent blend in all diesel fuels sold in the state.

The legislation also includes incentives for biofuel production facilities. One bill increases the maximum tax credit from $10 million to $20 million for renewable energy manufacturing facilities.

"That's important for incentivizing heavy investment in renewable" energies, said Tim Raphael, a spokesman for Pacific Ethanol, a biofuels company that is building Oregon's first ethanol production facility.

Factories that convert crops into fuel have been sprouting up all over Oregon; biofuel production facilities are in the planning stage or under construction in Clatskanie, Ontario, Boardman, Salem and Klamath Falls.

The legislation now moves to Gov. Ted Kulongoski, an enthusiastic supporter of renewable fuels.

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