Oregon’s House of Representatives became the latest legislative body to pass a bill that would require the use of ethanol and/or biodiesel blends in its state’s fuel supply. On March 1, representatives approved House Bill 2210, which if passed into law would require ethanol and biodiesel use in the state.

HB 2210 would put in place a state renewable fuels standard that would require at least 10 percent ethanol by volume in gasoline when in-state ethanol production reaches at least 90 MMgy for three months. The state’s Department of Agriculture would be required to adopt standards for ethanol blended with gasoline sold in Oregon.

If the bill is passed it doesn’t appear it would take long for it to become effective. Oregon has two ethanol plants under construction. Cascade Grain Products LLC is building a 108 MMgy plant near Clatskanie, while Pacific Ethanol Inc. recently began construction on a 35 MMgy plant near Boardman.

The bill would also require at least 2 percent biodiesel by volume when in-state production reaches 5 MMgy for three months. Five percent biodiesel would be required three months after in-state production reaches at least 15 MMgy. The Department of Agriculture would be required to identify when in-state production from sources in Oregon, Washington, Idaho and Montana reaches those levels.

The Oregon Department of Agriculture would also be required to adopt standards for biodiesel sold in the state. The minimum requirement doesn’t apply to fuel sold for use by railroad locomotives.

Oregon has one commercial-scale biodiesel facility. Sequential-Pacific Biodiesel LLC produces 1 MMgy of biodiesel from yellow grease. There are no plants under construction, although numerous projects have been proposed.

HB 2210 also provides an ethanol facility with a property tax exemption, which can be claimed for five years. A plant qualifies if built after 1993 and produces ethanol within five years after the first exemption can be claimed.

The bill also provides an interesting biomass collection tax credit. Agricultural producers or biomass collectors could receive a credit, which would not exceed $1 per million Btu of biofuel, for biomass used to produce biofuel within Oregon. The credit will be allowed if the taxpayer has obtained a tax credit certification from the state’s Department of Energy.

The Oregon Department of Energy would also be required to identify categories of biomass that qualify for the credit and establish a dollar rate per quantity of each category.

Upon receipt of the biomass, the biofuel producer would be required to provide a written receipt to the agricultural producer or biomass collector.

On Monday, the Montana state Senate also approved legislation that would require up to 5 percent biodiesel. If passed into law, Senate Bill 432 would eventually require 5 percent biodiesel in the state’s diesel supply. B2 would be the initial requirement until a gradual phasing in to B5.

The bill would become effective 30 days after the Montana Department of Transportation certifies that enough in-state refining capacity is available to provide the equivalent of 2 percent of the state’s annual diesel fuel consumption.

Montana doesn’t have any biodiesel plants in operation or construction. However, numerous projects are on the drawing board, including facilities in Havre and Culbertson.

A third state, Missouri, is also considering a 5 percent biodiesel requirement. Senate Bill 204, introduced by Sen. Bill Stouffer, would require biodiesel in the state’s diesel supply by Jan. 1, 2009.

Dave Nilles is Online Editor for Ethanol Producer Magazine. Reach him at dnilles@bbibiofuels.com or (701) 373-0636.

Posted: 10:30 a.m. CST Friday, March 2, 2007