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TRIBUNE PHOTO: JONATHAN HOUSE - Opponents of the Pembina propane terminal rally outside the hearing before it begins. The Portland City Council will decide the fate of a $500 million propane export terminal in North Portland, after the Portland Planning and Sustainability Commission grudgingly approved a zone change to enable the controversial project last Tuesday night.

Pembina Pipeline Corp., based in Calgary, Canada, hopes to tap propane produced via fracking in Alberta’s natural gas fields, transport it in mile-long trains to the Port of Portland’s Terminal 6, then load it onto ships bound for Asia via the Columbia River.

Planning and sustainability commissioners attached a provision that Pembina must pay to offset some of the carbon emissions stemming from combustion of the propane once it’s used in China, India or elsewhere in Asia. That would cost Pembina $6.2 million a year, with the money going to reduce carbon emissions via Oregon-based projects such as tree-planting, solar and wind power subsidies and carbon sequestration.

Pembina’s local project manager, Eric Dyck, said Tuesday that the company hasn’t yet studied the carbon emissions offset proposal, and isn’t prepared to comment on it.

Nearly 100 people testified on the project Tuesday, the overwhelming majority opposed to the propane terminal. One hour before the hearing began, 36 people were already lined up to assure there’d be time for them to speak.

North Portland residents and neighborhood associations are concerned about potential on-site explosions caused by propane leaks, earthquakes and even terrorism. Though Pembina has a solid safety record, many critics worry about potential derailments as trains journey through the Columbia River Gorge and into Portland, potentially on rail tracks near Northeast Sandy Boulevard.

Environmentalists decry the use of fracking, and are alarmed that Portland will become a channel to export fossil fuels that contribute to global warming.

Pembina argues that propane is a clean-burning fuel that can be used to replace coal and oil fuel in Asia, which foul the air and have a higher carbon footprint.

TRIBUNE PHOTO: JONATHAN HOUSE  - Protesters against the Pembina propane terminal stand up at the Planning and Sustainability Commission to demonstrate their views. Close vote

At the end of a six-hour standing-room-only hearing, the Planning and Sustainability Commission was knotted 5-5, which meant the proposal was rejected.

“If we embrace this project, we’re essentially going to get soot on our brand,” said Commissioner Chris Smith, leading the charge to kill the project. Smith recounted the environmental degradation of fracking — which includes injecting a chemical stew underground with vast quantities of water — and of efforts to harvest fossil fuels from the Canadian tar sands, which many consider an environmental nightmare. Though Pembina wouldn’t get its propane from the tar sands area, the company is involved in other fossil fuel projects there.

“We’re going into partnership with this entire enterprise,” for the 35- to 50-year life of the terminal, Smith said. “In the long term, this project is neither good planning nor sustainable.”

But commission Chairman Andre Baugh, who helped frame the carbon emissions offset proposal, said it’s not right for Western nations to pressure developing nations to reduce their carbon footprint while denying them an alternative fuel source that won’t pollute their air and has a lower carbon footprint.

“Equity is more than saying we’re just going to look at our own population,” Baugh said. “We need to give them some tools as alternatives; telling them ‘no tools’ seems disingenuous and hypocritical.”

Smith was joined by commissioners Mike Houck, Margaret Tallmadge, Gary Oxman and Teresa St. Martin in opposition.

Baugh was joined by Karen Gray, Don Hanson, Katherine Schultz and Howard Shapiro in voting to forward the project on to the City Council.

While the 5-5 vote technically meant the proposal would fail, Baugh pointed out that the Portland City Council would merely ask the commission to revisit the proposal, because city commissioners want the chance to vote on it. Then the panel would have to repeat the hearing process, and if they rejected the project again, the City Council could take up the issue anyway.

St. Martin grudgingly switched her vote so the project could move forward.

Many critics

About 200 opponents of the project, who vow to fight it every step of the way, massed outside in a rally before the hearing. They waved banners and signs, such as one saying “Propane is fracked gas; no terminal.” Some dressed in hazmat suits with dollar signs glued to their clothes, labeling themselves “Pembina climate profiteers.”

Inside the hearing, protesters led the crowd in song, singing “Oil, coal, gas; none of these shall pass; leave it in the ground, then turn the trains around.”

Among those testifying were students from Sunnyside Environmental School in Portland who studied the project. Fracking ruins the land, testified Truman Cowan, 14. Trying to clean up the land and water polluted by fracking is “just like trying to take the chocolate chips out of a chocolate chip cookie,” he said.

Portland isn’t one of the island nations threatened now by rising oceans due to climate change, testified Sunnyside co-founder Jan Zuckerman, “but our action here in Portland impacts those that are suffering.”

Studies by a Pembina consultant concluded the risks of an explosion or other catastrophe on site are fairly minimal, a conclusion shared by a local engineering firm hired by the city of Portland. But critics say even if Pembina operates the site safely, it doesn’t control the propane for much of its journey from Alberta to China.

“There’s been no effort to address the risks of transfer by rail and by boat,” said Bob Sallinger, conservation director of the Audubon Society of Portland.

Stu Taylor, Pembina’s senior vice president for its natural gas liquids business, testified that Pembina has safely shipped propane by rail for 15 years to Portland for local uses here. He cited a report by BNSF Railway that it plans to spend $6 billion upgrading its rail system. BNSF is one of two potential rail companies Pembina would use.

Several business and labor representatives testified about the importance of creating family-wage jobs from construction of the propane terminal, and subsequent operations. The terminal is the “largest-magnitude project” he’s ever seen in Portland, said Charlie Allcock, business development director of Portland General Electric, which would supply the electricity.

Taxing carbon emissions

Tom Armstrong, a city supervising planner, explained how a subcommittee of planning and sustainability commissioners devised the carbon emissions offset proposal.

Baugh and others presumed that half the Pembina propane will be used as an ingredient to manufacture plastics, which embeds the carbon emissions in the products rather than releasing them into the atmosphere. The panel presumed another 30 percent of the propane would be used to replace coal and oil, thus trimming rather than increasing carbon emissions. Then they applied the prevailing price of carbon emissions from Europe’s cap-and-trade system used to combat climate change, $6.77 a ton. Charging that amount to 20 percent of Pembina’s exports would result in a city levy of $6.2 million a year.

Armstrong noted that’s about a penny for each of the 560 million gallons a year Pembina wants to export from Portland.

In essence, Portland would be creating a one-off carbon tax with the proposal, though it would be framed differently to avoid legal complications from such a tax.

“We are blazing a bit of a trail here,” Armstrong said. When other nations or jurisdictions attach a tax on carbon, it’s generally done on the end product, he noted. Portland would be unique in attaching the fee at the middle stage of the process, before the propane is consumed.

Right now it’s speculative to say where Pembina will sell its propane, and whether or not it will be used to make plastics or replace use of oil and coal.

Commissioner Katherine Schultz argued the city should delay charging the emissions fee while it considers a formal fossil fuel exports policy, as suggested in the draft update of the city/county Climate Action Plan. The proposed carbon emissions offset smacks of “pay to play,” Schultz said, and seems rushed and unfair.

Some commissioners said that fee doesn’t come close to covering the environmental cost of those emissions. They wanted to apply the fee to half of Pembina’s emissions, which would amount to more than $16 million a year. That failed in a 4-4 vote.

As Commissioner Smith noted, it’s been cities like Portland, plus individual states, that have led the way on climate change policies while Congress dithers. Now it will be interesting to see how Portland city commissioners, whose city recently was named a “climate action champion” by President Obama, will handle this delicate issue.

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