1. (1) DEQ shall establish a reserve account for credits that is under its control. The purpose of this reserve account is to hold credits to ensure the environmental integrity of the Clean Fuels Program. This mechanism covers cases where the carbon reductions being awarded credits pose real risks of that reduction being reversed in the future, such as the risk that a carbon capture and sequestration operation is found to be ineffective (i.e., releases carbon). DEQ will indefinitely hold credits in the reserve account unless and until they are invalidated under section (4).

2. (2) Calculating contributions to the Reserve Account. For carbon capture and sequestration (CCS) projects, contributions to the reserve account will be calculated according to this rule In approving fuel pathways where the producer employs carbon capture and sequestration, DEQ will increase the certified CI score for the pathway by an amount necessary to contribute the required number of credits to the reserve account. The percentage contribution to the reserve account shall be calculated using the following equation: Risk-based contribution percentage = 105% - [(100% - Financial Risk) x (100% - Social Risk) x (100% - Management Risk) x (100% - Site Risk) x (100% - Well Integrity Risk)], where:

   1. (a) ‘Financial Risk’ is: 0% if the CCS project operator(s) demonstrate that their company has a Moody’s rating of A or better, or an equivalent rating from Standard and Poor’s or Fitch; 1% if the operator(s) have a Moody’s rating of B or better, or an equivalent rating from Standard and Poor’s or Fitch; or 2% if the operator(s) cannot demonstrate a rating of B or better from any of the above.
   2. (b) ‘Social Risk’ is: 0% if the CCS project is located in a country or region ranked among the top 20th percentile based on the World Justice Project Rule of Law Index; 1% if the CCS project is located in a country or region ranked between the 20th and 50th percentile in that same index; or 3% if the CCS project is located in a country or region that are in the bottom 50th percentile in that same index.
   3. (c) ‘Management Risk’ is: 1% if the operator(s) demonstrate that the surface facility has good access control (e.g., the injection site is fenced and well protected); or 2% if there is poor or no surface facility access control (e.g., the injection site is open and not fenced or protected).
   4. (d) ‘Site Risk’ is: 1% if the selected injection site has more than two good quality confining layers above the sequestration zone and a dissipation interval below the sequestration zone; or 2% if the site does not meet the above criteria.
   5. (e) ‘Well Integrity Risk’ is: 1% if all the wells for the CCS project meet US EPA Class IV well requirements or their equivalent; or 3% if the CCS project has wells that do not meet the Class IV or equivalent well requirements.

3. (3) Generating credits into the Reserve Account.

   1. (a) Based on the calculation described in section (2) and the total obligated gallons of fuel across all quarterly reports for a fuel pathway that employs CCS, DEQ will annually generate and deposit credits into the reserve account.
   2. (b) For any pathways employing carbon capture and sequestration which were approved in 2024, DEQ will treat the secondary margin of safety applied to such a pathway as the calculation that would otherwise have been completed under section (2) and will generate credits to be deposited into the reserve account.

4. (4) Invalidating credits in the Reserve Account.

   1. (a) Credits in the reserve account may be invalidated by DEQ when if finds the following:

      1. (A) Carbon dioxide or another stored greenhouse gas has been released into the atmosphere from a sequestration project associated with a fuel producer that had or has an approved fuel pathway. In cases where it is unclear if some or all the leakage is atmospheric or whether it left the intended geologic storage area but remained in the subsurface, DEQ will assume that atmospheric leakage has occurred; and
      2. (B) The atmospheric leakage was not intentionally caused by the fuel producer or sequestration project operator, or an entity related to either of them.
   2. (b) The number of credits invalidated as described in subsection (a) will be the amount necessary to offset the atmospheric leakage of carbon dioxide from the CCS project.
5. (5) Intentional Releases from a Storage Complex. If the release was intentionally caused by the fuel producer, project operator, or a related entity, then the fuel producer or CCS project operator is responsible for retiring the number of credits necessary to offset the release of carbon dioxide from the CCS project.

Statutory/Other Authority

ORS 468.020, 468A.266, 468A.268 & 468A.277

Statutes/Other Implemented

ORS 468.020 & ORS 468A.265 - 468A.277

History

DEQ 2-2025, adopt filed 01/09/2025, effective 01/09/2025