The Oregon Senate on Tuesday passed a bill to reduce carbon emissions from transportation fuels in the northwestern US state with an option to allow gasoline and diesel suppliers to buy carbon offsets from biofuel producers.

The bill, which now moves to the committee stage in the state’s House of Representatives, seeks to cut carbon emissions from fuels by 10 percent over 10 years from 2016.

Under the law, gasoline and diesel suppliers will be forced to cut their emissions by either buying “carbon intensity credits” given to biofuel producers, or by blending more low-carbon ethanol or biodiesel into their fuels.

The Oregon Department of Environmental Quality (DEQ) also plans to set up a system for entities such as electric vehicle charging stations to generate offsets.

The DEQ estimated that the move will increase gasoline prices by $0.19/gallon, while some consumer groups were pegging that figure at closer to $1/gallon.

The DEQ expects the new rules to cut Oregon’s emissions by 7.3 million tons over the next decade.

Vehicles in Oregon emitted 22.6 million tons of carbon dioxide in 2010, the last year where data is available.

Oregon previously passed a low-carbon fuel standards bill in 2009 that will expire this year.

The latest bill – SB 324 – narrowly passed in the state senate despite moves by Republicans to delay it by tying it to outgoing Governor John Kitzhaber and his fiancée Cylvia Hayes, who was a paid consultant for groups that organised support for the fuel standards.

The Oregon Department of Justice and state ethics commission are also investigating Kitzhaber and Hayes’ activities, prompting Kitzhaber to resign as Governor this week.

By Mike Szabo – mike@carbon-pulse.com