Portland’s 20% Storage Drawdown: A Question of Demand and Flexibility

As Oregon’s carbon-reduction goals for the transport sector become more stringent, reliable storage and delivery of low-carbon fuels is essential to achieving the State’s ambitions. Oregon’s Clean Fuel Program (CFP), Climate Protection Program (CPP), and Portland’s Renewable Fuel Standard (RFS) are driving volumes of low-carbon liquid fuels which can be used in the current fleet – renewable diesel (RD), biodiesel (BD), ethanol, and most recently sustainable aviation fuel (SAF). These fuels, along with petroleum fuels, are delivered to the terminals in Portland’s Critical Energy Infrastructure (CEI) Hub, where 90% of Oregon’s liquid fuels are stored and distributed. Yet the forecast underpinning Portland’s proposed 20% drawdown of CEI Hub storage capacity may not accurately reflect Oregon’s future liquid fuel needs. As discussed below, Stillwater’s West Coast Supply & Demand Outlook suggests demand will decline far more gradually than the City’s modeling assumed – raising questions about the pace and scale of the proposed reduction.

The CEI Hub is vital to low-carbon fuel supply, but it’s a thorny issue.

The overarching problem facing the CEI Hub is its location. Built decades before the region’s seismic risk was understood, the CEI Hub sits on the west side of the Willamette River in a high seismic hazard area. A 2022 study by EcoNorthwest for Multnomah County identified risks of accident, spill, or major failure during a seismic event. This report is a key source for regulators as they make decisions about changes to the Hub. In 2023, the City of Portland adopted Fossil Fuel Terminal Zoning Amendments which prohibit the development of new petroleum fuel storage tanks citywide and prohibit the expansion of tank capacity at existing petroleum fuel terminals. Under the amendments, terminals are allowed to build new storage tanks for renewable fuels to “support the transition to a reliable, low-carbon energy infrastructure.”

Recently, the Portland Bureau of Planning and Sustainability (BPS) proposed a regulatory package for CEI Hub that includes a 20% reduction in in-service fuel storage capacity at each bulk fuel terminal by October 1, 2036. This reduction would apply to all liquid fuels; no exception is made for renewable fuels. The drawdown rate was calibrated against a fuel demand model that projected Oregon liquid fuel demand peaking before 2030 and declining 20% by 2035 under current adopted policies.

The Portland Planning Commission considered amendments to the proposed zoning code in March 2026, and a Recommended Draft will go to the Portland City Council for final action in late summer / early fall 2026. Among the amendments under consideration are a capacity-transfer mechanism that would let storage move from more seismically vulnerable sites to less vulnerable ones, and a limited allowance for expanding aviation fuel storage.

Why 20% by 2036?

In 2025 BPS engaged Parametrix to provide a fuel forecast to determine whether existing storage capacity at the CEI Hub is likely to be sufficient. For the purposes of this study, Parametrix modeled three policy scenarios against a baseline scenario of Unchecked Growth. These scenarios include:

1. Current Adopted Policies Scenario: Total liquid fuel demand peaks at 2,653 million gallons in 2026 (0.8% above the 2023 baseline) before declining at an accelerating rate, falling 20% below baseline by 2035 and 84% by 2050.
2. Delayed Progress Scenario: Total liquid fuel demand peaks at 2,722 million gallons in 2029 (2.6% above baseline) before declining 75% by 2050.
3. Renewable Fueled Growth Scenario: Total liquid fuel demand peaks in 2029 at 2,690 million gallons (1.6% above baseline) and remains relatively flat before declining 32% by 2050.

Parametrix calibrated the BPS 20% drawdown rate against the 2035 outcome of the Current Adopted Policies scenario. Importantly, however, Parametrix identified several material caveats to their forecast:

• Throughput data was unavailable and was inferred from storage volumes, tank capacity, and an EIA-derived 25-day average fuel supply benchmark;
• Results are highly sensitive to assumed tank turns and dwell time – the model does not address tank-by-tank sufficiency, fuel segregation requirements, or transloading logistics; and
• The model’s Advanced Clean Cars II (ACC II) input assumes policy targets are achieved on time, with the EV share of new light-duty vehicle sales reaching 100% by 2035 in the Current Adopted Policies case.

A 20% decline in liquid fuel demand by 2036 is optimistic

Parametrix’s Current Adopted Policies scenario assumed “some known delays and uncertainty” but still anticipated that “key targets are reached.” But last June the U.S. Congress rescinded the Clean Air Act waiver that enabled California’s ACC II and Advanced Clean Trucks programs (adopted by Oregon and 12 other states). Additionally, Federal EV tax credits expired on September 30, 2025, which dampened new ZEV sales at the end of 2025. California is suing the federal government over the nullification of ACC II, but these developments suppress expected ZEV adoption rates and put the Parametrix Current Adopted Policies scenario at risk. Because of these challenges, Stillwater’s analysis of the underlying ZEV adoption assumptions indicates West Coast gasoline demand is more likely to decline by between 7.5% and 15.5% by 2040.

Stillwater’s West Coast Supply & Demand Outlook – the fuel-by-fuel forecast our clients across the West Coast fuels value chain rely on for planning – offers a more nuanced view of the future of liquid fuel demand in the Pacific Northwest. Unlike a single-engagement policy model, our Outlook is grounded in observed market behavior and refreshed as policy and market conditions shift. It shows gasoline demand declining gradually, jet fuel demand rising, and diesel demand holding relatively flat. Meanwhile, the low-carbon fuels displacing the petroleum portion of these pools (SAF, RD, and BD) continue to grow. Measured against that trajectory, a 20% reduction in total liquid fuel demand within 10 years of the ordinance adoption date appears optimistic. 

Limiting fuel storage flexibility comes with market risks

Storage capacity at the CEI Hub provides operational flexibility for terminal operators to receive, segregate, and blend renewable fuels into the petroleum-based gasoline and diesel pool. When storage flexibility is reduced, the operational cost of meeting CFP, Portland RFS, and CPP obligations rises. Among the cost drivers are constrained tankage for segregating RD, BD, SAF, and ethanol; reduced ability to time receipts to take advantage of favorable market windows for marine, rail, and truck deliveries; and reduced ability to hold inventory through periods of disrupted supply. Constraining storage at the CEI Hub during the energy transition will add to the marginal cost of CFP and Portland RFS compliance. Increased costs in the fuel value chain are reflected in retail fuel prices and passed down to consumers.

Additionally, Oregon’s near-term decarbonization gains under the CFP and Portland RFS rely on displacing petroleum fuels with ethanol, RD, BD, and SAF within the existing vehicle and aircraft fleet, because vehicle fleet turnover takes time. If renewable fuel volumes need to grow to meet the Portland RFS 50% requirement, which kicked off on July 1, 2026, and 99% requirement by 2030, terminal segregation capacity will need to be flexible enough to meet those goals. Restricting hub storage capacity while requiring rising renewable fuel volumes places these two policy objectives in direct tension.

Bottom Line: Storage policy should follow a realistic demand outlook

The proposed 20% reduction in CEI Hub storage capacity is calibrated against a model projecting that aggregate Oregon liquid fuel demand will decline approximately 20% by 2035. Stillwater’s analysis indicates gasoline demand alone is more likely to decline 7.5% to 15.5% by 2040 – well short of the steeper 2035 trajectory the Parametrix model assumes. If demand declines more slowly than projected, the gap between available storage and required throughput will narrow over time, raising the cost of CFP, CPP, and Portland RFS compliance and reducing the flexibility of the supply system to absorb disruptions during the transition. Before Portland locks in a 20% drawdown, the demand outlook underpinning it deserves a second, market-grounded look.