Inside DEQ’s first CFP listening session of the 2026-2027 Rulemaking 

On November 20, 2025, Governor Tina Kotek issued Executive Order 2529 directing state agencies to strengthen Oregon’s clean energy policies, including the Clean Fuels Program (CFP). In response, on December 17th the Oregon Department of Environmental Quality (DEQ) held a CFP listening session to explain the new direction, outline the scope and timeline for the upcoming rulemaking, and take early stakeholder input on target setting, transportation electrification, and renewable electricity provisions.​

Bottom Line Up Front: DEQ plans a 2026-2027 rulemaking to extend CFP targets at least to 2040, evaluate whether changes to existing standards before 2035 are warranted, and consider amendments to better support transportation electrification and fix issues in the offsite renewable electricity provisions. The rulemaking will be informed by new modeling led by UC Davis and by stakeholder feedback gathered through a Rulemaking Advisory Committee (RAC) and public comments, with final Environmental Quality Commission (EQC) action expected in late 2026 or early 2027.​

Rulemaking Focus Areas

DEQ staff explained that, under Executive Order 25-29, the agency and EQC have been directed to update CFP rules to strengthen the program by establishing a new carbon intensity (CI) reduction requirement of at least 50% by 2040, compared to the current 30% by 2035 targets that then flatline. Next year’s rulemaking will therefore extend the program’s targets at least to 2040 and use new modeling to determine whether changes to the existing standards through 2035 are appropriate.​

The Executive Order also directs DEQ to evaluate the scope and stringency of other low-carbon fuel (LCF) programs in California, Washington, and British Columbia and propose new targets and rule revisions as needed to better align Oregon’s program with neighboring jurisdictions. In addition, DEQ has been asked to propose amendments aimed at advancing transportation electrification in a cost-effective and equitable manner and to fix issues with the offsite renewable electricity provisions that arose from changes in renewable electricity certificate (REC) and certification practices.​

DEQ clarified that the rulemaking scope will include CI standards and at least some amendments around electricity provisions, with the possibility of additional fixes elsewhere. However, staff emphasized that adding too much to the scope could lengthen the process, so the primary focus will remain on new targets, transportation electrification, and renewable electricity.​

This will be the third major round of target setting (after efforts in 2015-2017 and 2020-2022), and DEQ staff indicated that such target setting always involves judgment calls informed by modeling and guided by previously articulated priorities such as maximizing GHG reductions, commercializing low-carbon fuels and vehicles, supporting fueling infrastructure investment, and delivering local air-quality benefits.​

During clarifying questions, stakeholders asked about the scope of the rulemaking – for example, whether existing CI standards could be adjusted up or down before 2035. DEQ confirmed that adjustments to the current “standards curve” before 2035 are on the table and that the agency is actively seeking written and oral comments on priorities for target setting, modeling assumptions, and electrification and equity provisions.​

Associated Modeling

DEQ explained that the new target-setting effort will rely on updated modeling conducted in partnership with the UC Davis Institute of Transportation Studies (ITS-Davis), using tools originally developed for the California LCFS and other jurisdictions and now being adapted to Oregon. Clean Fuels Program Lead Bill Peters noted that DEQ had already begun contracting with UC Davis earlier in the year, using federal planning dollars to build internal compliance scenario tools that DEQ can update over time; this work will now directly support the CFP rulemaking.​

Colin Murphy of ITS-Davis described a two-step modeling framework. First, UC Davis will use the Transportation Transitions Model (TTM), a vehicle fleet turnover model based in part on the U.S. Department of Energy’s (DOE) VISION model, to project Oregon’s light-duty and medium/heavy-duty vehicle fleet and driving activity over coming decades, yielding baseline fuel demand by fuel type. Second, that fuel demand will feed into the Fuel Portfolio Scenario Model (FPSM), adapted from CARB’s Illustrative Compliance Scenario Calculator, to construct portfolios of conventional and alternative fuels and assess credit and deficit generation under different CFP target scenarios.​

Murphy noted that FPSM draws on peer-reviewed studies, other published work, and projections of past trends to estimate fuel availability. In this way, they can test a wide range of scenarios, including higher and lower EV deployment, economic growth, and alternative liquid fuels volumes. The goal is to identify sets of targets that yield roughly balanced credit and deficit outcomes with a reasonable credit bank across many plausible futures, rather than to produce a single-point forecast.​

During Q&A, DEQ and UC Davis clarified that updating near-term modeling will be necessary even though previous illustrative scenarios were completed for the 2022 rulemaking. They explained that changes since then – such as faster-than-expected RD capacity buildout and federal shifts affecting both EV support and biofuel economics – mean that both the credit bank and future supply outlook must be recalibrated as part of the new scenario work. DEQ expects to receive initial modeling results in spring or early summer to support RAC discussions.​

Transportation Electrification and Electricity Provisions

DEQ devoted a substantial portion of its presentation to explaining why transportation electrification is central to long-term CFP target setting and how the program currently supports electricity. Staff noted that illustrative compliance scenarios and experience in other jurisdictions show that deep CI reductions eventually require a shift away from combustion engines, because biofuel supply from low-carbon feedstocks is limited and most biofuels fall in roughly the 20-60 g/MJ range for CI. Electricity, by contrast, can approach very low CI values in Oregon and has already generated around 1.1 million credits since 2023 – worth over $100 million at recent prices – helping both to support EV deployment and to provide significant credit supply that holds down overall program costs.​

DEQ reviewed the 2021 electricity rulemaking, which updated grid-mix calculations, adopted renewable electricity provisions, required utilities receiving residential credits to report annually how they spend credit proceeds, and created an Advanced Crediting Provision for public fleets and their contractors. That advanced credit mechanism will allow eligible public fleets and contractors adding electric or hydrogen vehicles to receive up to six years of credits up front, repaid over time by foregoing later credit generation, to help with upfront capital costs.​

DEQ then summarized current renewable electricity provisions and the new challenge created by Greene’s1 decision not to certify renewable energy certificates (RECs) associated with power used to comply with Oregon’s HB 2021 utility decarbonization requirements.2 Because CFP rules currently require Greene-certified RECs to ensure environmental integrity and avoid double counting, this decision has made it harder for reporting entities to find qualifying RECs. DEQ asked stakeholders for input on whether RECs remain the best method for tying renewable generation to charging, whether other standards could be appropriate, how best to ensure environmental integrity, and how to handle potential double-claim issues when the underlying power is consumed in Oregon.​

Staff also posed a series of questions for stakeholder feedback on transportation electrification: what is needed to support more Oregonians choosing to go electric, what strategic investments are needed, whether existing provisions could be modified to better support electricity, what new provisions should be considered, and how the CFP can best target equity in both general program design and electrification incentives.​

Next Steps and Timeline

DEQ outlined a multiyear rulemaking timeline. In January and February 2026, the agency will appoint a RAC made up of a representative group of stakeholders – including fuel suppliers, electric utilities, environmental interests, and others – to advise on policy concepts, draft rule amendments, and required fiscal analyses. RAC meetings will double as public workshops with opportunities for non-RAC-member public comment.​ The first RAC meetings are anticipated in March or April with additional meetings through spring and summer. In fall or early winter, DEQ plans to issue a Notice of Proposed Rulemaking, beginning the formal public comment period, and then bring the rule package to the EQC for consideration and vote by early 2027.​ Staff stressed that these dates are preliminary and subject to change but represent DEQ’s best current estimate for an “efficient rulemaking.” The agency will accept written comments on the presentation and on ideas for next year’s rulemaking through Friday, January 9, 2026.

We’ll be following this rulemaking process closely in the new year and will provide analysis around the proposals periodically via Stillwater’s LCFS Newsletter. Subscribe today so you don’t miss a beat!