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House Bill 2186: The construction industry is bracing itself for any possible impact that the state’s proposed low carbon fuel standards might have on construction vehicles and equipment.

The proposed rules, which are part of the Clean Fuels Program currently being drafted by the Oregon Department of Environmental Quality, would lower by 10 percent over 10 years the carbon content of blended transportation fuels that producers and distributors make or import into the state.

Contractors and others in the construction industry say they support the goal of reducing greenhouse gases. But they’re also concerned that the new requirements will force them to spend thousands of dollars to upgrade equipment and vehicles they already own while also pushing up the cost of new equipment and vehicles in the future.

“What’s always missing is the actual impact of the new policy,” said John Rakowitz, public and strategic affairs director for Associated General Contractors Columbia-Oregon Chapter. “If you want to change the fuel that producers and distributors are allowed to use, then every piece of equipment has got to come into alignment with the new rules. It’s another costly, complicated measure where we don’t know yet what the impact will be.”

AGC is a member of Oregonians for Sound Fuel Policy, a group that includes construction, agricultural and trucking industry associations that oppose the proposed low carbon fuel standard.

Originally created in 2009 by House Bill 2186, the Clean Fuels Program presented a five-year window for those rules to be crafted. The program is scheduled to expire at the end of 2015 unless the Legislature during next year’s session votes to remove the sunset provision. However, Gov. John Kitzhaber this past February ordered DEQ to draft the new set of rules. He also ordered the department to have the new rules ready for implementation by Jan. 1 of next year.

Some construction companies may be waiting to see what the Legislature will do during its next session, but they should at least keep the proposed rules in mind as they consider future capital purchases, said Cory Ann Wind, DEQ’s air quality planner for the state’s Clean Fuels Program.

“The most logical thing is for these companies using diesel now to look for equipment using liquefied natural gas, propane or other alternative fuels and electric,” Wind said. “Or, they can retrofit diesel engines to have dual fuel engines for diesel or natural gas.”

The challenges of retrofitting fleets, which are in some cases between 10 years old and 20 years old, comes with the costs that could run into thousands of dollars and more for upgrading fleets, said Ron Bennett, risk manager for Springfield-based Hamilton Construction Co.

Hamilton received an $18,345 grant to take part in an Environmental Protection Agency 2008 pilot project to convert a diesel engine to biodiesel on a 35-ton construction crane.

The total costs for the retrofit were $45,000 to purchase and install the new engine on the crane, according to Bennett.

“We discovered that the exhaust filters were more expensive to maintain and fuel costs went up,” he said.

When compared with petro-diesel fuel, Hamilton found that the biodiesel burned more quickly, was less efficient, and was less readily available.

“We support biofuels and cooperating with the best tools we can find,” Bennett said. “But there is some frustration making sure there’s quality and cost predictability.”

Those concerns were noted by Wind, who said the proposed rules would give fuel providers different options for creating lower carbon-emitting fuel blends.

The state’s current Renewable Fuel Standard, which requires a 5 percent biodiesel blend and a 10 percent ethanol mix with petroleum products, has not resulted in equipment failure, Wind said.

The lower-carbon emitting fuels that would be developed by providers under the proposed rules would likely need a higher blend of biodiesel than those that currently meet the Renewable Fuel Standard. Newer vehicles have warranties that allow up to a 20 percent biodiesel mix, Wind said.

Contractors might indeed need to retrofit older vehicles to allow them to use the lower carbon emitting fuels, Wind said. But contractors who don’t want to pay for retrofits on their existing equipment and vehicles will have another option. The regulations allow fuel providers to continue to provide the market with higher carbon-emitting fuels as long as they pay a carbon credit for those fuels, Wind said.

While the state regulations don’t prohibit fuel providers from passing the added expense for those carbon credits on to consumers, the rules do have safeguards in place to prevent the cost of lower carbon fuels from shooting sky high, Wind said.

Under the program, DEQ will be required to monitor fuel costs, and shot down or suspend the program immediately if Oregon’s costs rise unexpectedly higher than any neighboring state that doesn’t have a similar standard.

“Our program cannot cause the price of fuels in Oregon to be higher than a neighboring state that does not have the standard,” she said. “There’s definitely the potential that biofuels are cheaper than petroleum as well.”