Governor urges `cap and trade' plan to reduce greenhouse gases.

Byline: David Steves The Register-Guard

SALEM - A day after President Bush pushed renewable energy into living rooms across the country, the topic took center stage Wednesday in the Oregon Capitol.

But Gov. Ted Kulongoski and lawmakers made clear that their push for renewable sources of electricity and motor vehicle fuel derived from crops was under way long before the president took up the issue Tuesday in his State of the Union speech.

Kulongoski convened a roundtable of working groups he appointed months ago to recommend ways to reduce greenhouse pollution to fight global warming and to wean Oregonians off foreign oil.

Citing a newly released report from one of his clean-energy work groups, Kulongoski said he would expand his agenda by establishing a "cap and trade" system to reduce greenhouse gas emissions.

The governor said he would pursue an in-state version and work with other Western states to create a regional version.

Such a system would allow companies that clean up their carbon emissions to earn credits and sell them to businesses that need more time to curb their emissions of gases that contribute to global warming.

That same day, the state House Environment and Energy Committee kicked off a series of hearings on a bill with incentives and requirements meant to create a stable market for biofuels and encourage their production in the state.

That proposal, House Bill 2210, is one of several being jointly pursued by Kulongoski and lawmakers.

Kulongoski acknowledged that Oregon won't be the first state to aggressively pursue the development of renewable energy resources.

However, Oregon is better positioned than most states to achieve its goals "because all of the ingredients lie within our boundaries," he said, referring to Oregon's geographic, geologic and climatic abilities to generate geothermal energy, harness the ocean's waves, and reap electricity from wind and fuel from crops that can be added to gasoline and diesel fuels.

Rep. Jackie Dingfelder, the Portland Democrat who heads the committee considering the bill, told panel and audience members that many of the elements should be familiar, since they were taken from a near-identical proposal she backed in 2005, but which failed to win passage in the session's final days. The bill would:

Expand tax incentives for producers of biofuel and its raw materials.

Create an income-tax incentive for consumers' use of biofuel, available over four years.

Set fuel standards for biodiesel and ethanol based on in-state production.

Ban the sale of gasoline containing certain additives found to degrade water or air quality.

Set the same standard for the use of biodiesel to fuel state-owned vehicles already in place for ethanol.

Allow on-farm biofuel production facilities on rural land zoned for exclusive farm use.

At this first hearing, only invited speakers testified. Thomas Endicott, managing partner of SeQuential Biofuels, said his company relies on used vegetable oil from restaurants and food processors.

But with competition growing for this limited resource, it made sense to create tax incentives and market certainties for Oregon farmers to grow crops such as canola seed for oil that can be used in biodiesel, said Endicott, who helped found the company in Eugene. It now has stations up and down Oregon's Interstate 5 corridor.

Kulongoski supports the biofuels push. He also is promoting bills that would:

Set a "renewable portfolio standard" for Oregon's electric utilities to derive 25 percent of their power from renewable resources - biomass, wind, wave, geothermal and hydrodams that meet certain environmental standards - by 2025.

Expand tax credits for companies that meet clean energy standards in manufacturing and production.

Make it easier for people to qualify for the residential energy tax credit. Examples include allowing the credit for more than one project - such as buying a solar electric system and an energy-efficient appliance - in the same year.

ON THE WEB Here's where you can find more information on Gov. Ted Kulongoski's clean-energy task force and work groups:

Oregon Strategy for Greenhouse Gas Reductions report: http://oregon.gov/ENERGY/GBLWRM/docs/GWReport -Final.pdf

Carbon Allocation Task Force report: http://oregon.gov /ENERGY/GBLWRM/CATF-Rpt-Ltrs.shtml

Climate Change Integration Group report: http://oregon .gov/ENERGY/GBLWRM/docs/CCIG_Interim_Report_Final.pdf