A BILL TO FUEL THE FUTURE.

Byline: Susan Palmer The Register-Guard

On a picture perfect day in Eugene, Gov. Ted Kulongoski signed into law a bill that rewards those who grow, process and use biodiesel and ethanol, and proclaimed it the most significant piece of environmental legislation in Oregon in more than 30 years.

Flanked by local and state politicians, the governor celebrated the legislative success at the SeQuential Biofuels filling station in south Eugene. It's the only gas station in Oregon that sells a range of biofuels that will work in any vehicle.

Biofuel - which includes some percentage of ethanol or diesel with some percentage of vegetable oil - has been gaining ground in recent years as an alternative to petroleum products that make the country less reliant on fuel from the Middle East and help reduce the greenhouse gases responsible for global warming.

Before signing House Bill 2210, Kulongoski praised the entrepreneurs who founded SeQuential Biofuels, which also operates a string of biodiesel outlets across the state and co-owns a production facility in Salem.

"I want to focus on this facility for a moment because it truly demonstrates much of what we fought for and achieved this session around energy independence and combating global warming," Kulongoski said.

The bill creates a renewable fuel standard requiring that 10 percent of the gasoline supply be blended with ethanol and 2 percent of the diesel supply be blended with biodiesel.

That requirement kicks in only after Oregon ethanol production reaches 40 million gallons per year and Pacific Northwest biodiesel production reaches at least 5 million gallons per year.

New production facilities planned or under construction will bring Oregon to that level in about a year, according to Kulongoski spokeswoman Anna Richter Taylor.

In addition to the renewable fuels standards, the bill creates tax incentives for those who produce and process the building blocks of biofuels, including oil seed crops, grain crops, grass, wheat straw and animal rendering by-products as well as forest and agriculture-sourced biomass. Corn production is not included in the tax incentives.

Residents who use the highest percentage blends of biofuels will receive tax credits as will those who use 100 percent biofuel agriculture or forest waste pellets for home heating.

Meanwhile, new production facilities are planned across the state. SeQuential Biofuels partnership will expand its Salem biodiesel production plant with a groundbreaking planned for Friday, and Pacific Ethanol, a California producer with offices in Portland is building an ethanol plant in Boardman. Two new facilities in Clatskanie and Port of Morrow are also planned, the governor said.

Thomas Endicott, a partner in SeQuential Biofuels called the bill among the most progressive and comprehensive in the nation.

Because it requires the use of biofuels, it reassures the companies investing in production and distribution that there will be a market for their products, said Tim Raphael, communications director for Pacific Ethanol.

More people are starting to come around to biofuels, said Ian Hill, a SeQuential Biofuels managing partner. While government fleets like the state Department of Transportation and the city of Eugene have used the alternative fuels for a while, ordinary people are discovering E-10, a 10-percent blend of gas and ethanol that sells at the small station tucked on McVay Highway just north of Lane Community College.

It took a few months after the station opened last September to get the word out, but Hill says it's operated in the black for the past six or seven months.

Despite Tuesday's hoopla, the news on biofuels isn't all good.

Ethanol is a less efficient fuel than gasoline, especially corn-based ethanol. And a recent study by Oregon State University economists concluded that biofuels are a much more expensive remedy to reducing greenhouse gases than other methods such as improving gas mileage or establishing a carbon tax.

But Oregon is pinning its hopes, not on corn, but cellulosic ethanol produced from wood or agricultural waste products, which has a better energy return than corn-based ethanol, the governor said.

"That's what Oregon's niche is going to be," he said.