October 21, 2019

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Oregon Adopts Renewable Natural Gas Portfolio Standards

While the high-profile and politically-charged failure of the Oregon legislature to pass cap-and-trade legislation has garnered much public attention, Oregon nonetheless adopted less high-profile but important energy legislation in its recently-concluded session. Chief among these is SB 98, which adopts new portfolio targets for the use of renewable natural gas by Oregon’s natural gas utilities and directs the Oregon Public Utility Commission (OPUC) to establish mechanisms by which those utilities can recover their investments in renewable natural gas projects. The bill was signed by Governor Kate Brown on July 31, 2019.

The new statute creates increasing targets for the use of renewable natural gas in Oregon, moving in steps from 5% in 2020-24 to 30% by 2045-50. While these are non-mandatory targets, and are fundamentally different from the binding renewable portfolio requirements Oregon and other states apply in the electricity sector, they should create strong incentives for investments in renewable natural gas projects by Oregon’s natural gas utilities.  

SB 98 defines “renewable natural gas” to include biogas, such as methane produced from anaerobic digesters commonly used by dairies to treat cattle waste, as well as methane and similar hydrocarbons produced from landfills and other non-fossil sources. Importantly, the legislation defines “renewable natural gas” to include hydrogen produced from renewable resources, which will create incentives for Oregon utilities to pursue promising emerging renewable hydrogen technologies.

The legislation directs the OPUC to create cost-recovery mechanisms for investments in renewable natural gas by both large natural gas utilities, those with more than 200,000 customers, and for smaller natural gas utilities. For large utilities, OPUC must establish a mechanism, which may include an automatic cost-adjustment clause, permitting utilities to recover all costs prudently incurred to attain the statute’s portfolio targets for renewable natural gas. The utilities may recover investments in infrastructure such as pipelines, connections, and gas purification equipment, as well as costs incurred to procure renewable natural gas from third parties. The mechanism is subject to a price cap such that the utilities may be disallowed from recovering costs if the utility’s total retail revenue requirement increases by more than 5%.   Renewable natural gas supplies must be acquired through competitive bidding.  

A similar process is required for small utilities, although the legislation is less prescriptive, permitting the OPUC to define the appropriate price cap, portfolio goals, and other specifics. Rulemakings for both large and small natural gas utilities must be completed by July 31, 2020.

The Oregon legislation should create a significant new market for renewable natural gas in the Northwest, particularly when considered in conjunction with new energy legislation in Washington that also seeks to give a boost to renewable natural gas. The legislation is likely to create a significant market for biogas produced by sources such as dairies, composting operations, and municipal sewage treatment plants, as well as encouraging new renewable hydrogen production technologies.

© 2019 Beveridge & Diamond PC

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About this Author

Eric Christensen Energy & Natural Resources Attorney
Of Counsel

Eric is a leading energy and natural resources attorney in the Pacific Northwest.

He assists renewable and traditional energy companies, as well as major energy consumers, to navigate the complex legal and regulatory systems governing the nation’s energy industry. With more than 30 years of experience, Eric has successfully represented clients in litigation and regulatory matters, ranging from the U.S. Supreme Court to proceedings before federal and state agencies. Before entering private practice, Eric served as Assistant General Counsel at Snohomish County (WA)...

206.620.3025
David C. Weber, Beveridge and Diamond, co founder, seattle, washington, environmental law, air, Air and Climate Change Practice Group, national air quality
Principal

David Weber is the Managing Principal and co-founder of Beveridge & Diamond’s Seattle, Washington office.  He also serves as the co-chair of the Firm’s Air and Climate Change Practice Group. David focuses his practice on environmental litigation and compliance counseling, including air and water quality regulation, hazardous waste handling and remediation, and contaminated site cleanups under federal and state laws.

A cornerstone of David’s practice is advising clients on national air quality and climate change issues. He represents businesses in connection with enforcement proceedings, agency rulemakings, and permitting issues under the Clean Air Act and similar state air laws and regulations.  His work has included a wide range of CAA compliance issues, including Title V, NSR/PSD, NSPS, and NESHAP/MACT projects.  He also has significant experience in matters related to the regulation of mobile and off-road sources, such as California’s off-road diesel and large spark-ignition regulations.

David also devotes a significant portion of his practice to handling complex environmental remediation and restoration projects. He has extensive experience in successfully and efficiently prosecuting and defending cost recovery and natural resource damages claims under CERCLA and state Superfund laws. 

BACKGROUND & COMMUNITY INVOLVEMENT

David is an active member of the ABA Section of Environment, Energy, and Resources. He is an EPA Region 10 reporter for the Air Quality Committee and recently served as a Vice-Chair of the Environmental Litigation and Toxic Torts Committee.  David has represented Washington State CASA, the Pike Market Medical Clinic, and KCBA’s Legal Services for the Homeless Program on a pro bono basis.

David received his B.S. in Journalism and Political Science from the University of Oregon, and his J.D. from the University of Oregon School of Law. In law school, he was an Associate Editor of the Oregon Law Review.  In college, David was a captain for the Oregon Ducks football team, as well as a three-time Pac-10 conference All-Academic selection.  Away from his law practice, David enjoys rooting for his Ducks and spending time with his wife, Courtney, and their two lively daughters.   

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