After more than a year of back and forth legal challenges, oil transporter Zenith Energy has extended a compromise to the city of Portland: if the city approves a land permit for Zenith’s Northwest Portland facility, Zenith will replace all of its crude oil operations with renewable fuels within five years.

On the surface, the offer addresses both the city and activists’ concerns of curbing carbon emissions and reducing fossil fuel operations in Portland. A closer look at the proposal raises questions of regulation for renewable fuels, risk, and trust in Zenith.

Zenith has been storing and transporting crude oil at its facility at the Critical Energy Infrastructure (CEI) Hub—a 6-mile liquid fuels tank farm in Northwest Portland—since 2017. In 2020, the company transported over 200 million gallons of oil. For years, environmental activists pressured the city to stop Zenith’s fossil fuel operations in the city.

In 2021, while the state Department of Environmental Quality (DEQ) was reviewing Zenith’s application to renew its air permit, Portland officials saw an opportunity to stop Zenith’s operations. In August 2021, the city denied the facility a land use permit it needed to secure a new air permit from the state, claiming that Zenith’s operations aren’t aligned with Portland’s 2035 Comprehensive Plan. The denial triggered a legal challenge from Zenith that has routinely been ruled in the city’s favor as Zenith continues to appeal the decision to higher courts. The Oregon Supreme Court is currently deciding if it will take the case.

As the challenge moves through the courts, Zenith appears to be pursuing an alternate route to keep operating in Portland.

On September 15, Zenith announced in a press release that, if granted the necessary land permit by the city, it would switch all of its crude oil storage at its Portland facility to renewable fuels in five years. According to the company, 96.5 percent of the facility’s operations would be renewable fuels while 3.5 percent would cover jet fuel which currently does not have a renewable option.

The city is currently reviewing Zenith’s offer. 

“Zenith has now resubmitted a new application that includes commitments to wind down handling of crude oil, reduce storage tank capacity, cap emissions, and terminate all asphalt refinery operations,” said Margaux Weeke, a spokesperson for City Commissioner Dan Ryan, who oversees the bureau responsible for denying the land permit. “The city is reviewing the submittal and will consider whether the proposal is compatible with the 2035 Plan.”

According to Zenith, the switch towards renewable fuels “can reduce carbon emissions by up to 80%.” Portland has set a goal of reducing emissions to 50 percent below 1990 levels by 2030 and plans to replace 99 percent of petroleum diesel in the city with renewable diesel by 2026, which could incentivize the city to approve the proposal.

However, environmental lawyers and advocates told the Mercury it’s not that simple. 

Renewable fuels is an umbrella term for fuels created from renewable resources, like plant and animal matter. While it’s true that some renewable fuels burn with 80 percent less emissions than fossil fuels, some renewable fuels are less environmentally friendly. Some scientists believe corn-based biofuel, for example, actually causes more carbon emissions in total due to the forests that are cleared to make space for the crop, the use of petroleum-based pesticides, and petroleum-powered harvesting tools. A 2018 paper by a leading environmental law expert argued that, due to the lack of environmental regulations on renewable fuels and biofuels, renewable fuels can have the same, if not worse, environmental impacts as fossil fuels.

Zenith did not respond to questions on what kinds of renewable fuels the facility would transport, but the company has previously indicated that it would carry whatever renewable fuels the market demanded. Portland’s efforts to switch to renewable diesel include a “carbon-intensity standard,” which requires renewable fuels sold in the city to use recycled and low-carbon materials and excludes most biofuels strictly made from agricultural products, like corn grown for fuel.

To environmental advocacy group Extinction Rebellion, renewable fuels are still risky due to the limited regulation of the term and the context of where Zenith would be housing those fuels in Portland. According to a 2021 report from Multnomah County, the CEI Hub could release nearly 200 million gallons of liquid fuels into the Willamette River and air during a major earthquake, possibly causing deadly fires in the surrounding residential neighborhoods. The trains that carry oil to Zenith and other oil transporters run through North Portland neighborhoods like Cully and St. Johns, leading neighbors to be concerned about the risk of a train derailment and explosion.

“As far as the CEI Hub goes, we need to transition away from all fuels being stored there because biofuels go boom the same as fossil fuels,” said Extinction Rebellion member Lynn Handlin. "When the earthquake hits, the neighbors and the fish and the water and everything else are not going to care whether that's fossil fuel or biofuel, it's all going to dissolve and explode.”

The city’s current legal battle with Zenith, however, could last years as the case can be appealed to higher and higher courts. As the case is hashed out in the courts, Zenith continues to operate in opposition with the city’s climate goals. If the city opted to work with Zenith to remove some fossil fuel operations in Portland as opposed to taking its chances with the legal system, the permitting process would move to the Oregon DEQ. Zenith did not respond to the Mercury’s questions, but would be expected to drop its current legal challenge against the city if its renewables proposal was accepted.  

According to DEQ spokesperson Lauren Wirtis, if Portland granted a land use permit to Zenith, the DEQ would process the air permit as usual. The permit would go through a public comment period before a final decision was made. Any conditions included in the land permit—like the facility switching to renewable fuels in five years—would be upheld by the DEQ in the air permit as well, and the air permit would be enforced by the DEQ through standard reporting requirements for the facility.

Zenith has an inconsistent history of alerting Oregon regulators to changes in its operations. In 2018, Zenith told the Oregon DEQ that it was moving away from transporting crude oil, but, in reality, the company continued to transport crude oil and possibly increased its capacity. The inconsistency was discovered due to a Bloomberg News story, not state regulatory processes, which raises concerns for local environment agencies about how Zenith will be held accountable for switching to renewable fuels if the city agrees to the proposal.

“If this moves forward, Columbia Riverkeeper would want to closely scrutinize Zenith’s promises and actions and the requirements in this permit, because Zenith has a history of misleading regulators and the public,” said Miles Johnson, an attorney for Columbia Riverkeeper.

There is no timeline for when the city must respond to Zenith’s most recent proposal.