Men raise United States and State of Jefferson flags outside the Capitol in Salem, Ore., during a Timber Unity rally Thursday, Feb. 8, 2020. The rally was convened to oppose a cap-and-trade bill being proposed by Democrats that year.
Bradley W. Parks / OPB
As Oregon lawmakers frantically search for money to fund roads and wildfire prevention, they have landed on a surprising idea: Dredging up a fight over cap-and-trade that once dominated legislative attention.
In recent weeks, there’s been increasing momentum to adopt a cap-and-trade system, where polluters purchase credits for their greenhouse gas emissions, and trade them with other emitters to ensure they are meeting a declining state emissions cap.
That push has been led, according to four sources with knowledge of the talks, by Sen. Bruce Starr, R-Dundee. But it appears to have gained traction as other proposals to raise money for road and bridge maintenance and firefighting face an uncertain fate.
The Legislature’s top two Democrats, House Speaker Julie Fahey and Senate President Rob Wagner, have been engaged in talks. And on Thursday morning, the effort came into public view when Sen. Chris Gorsek, D-Gresham, and Rep. Susan McLain, D-Forest Grove, sent a memo updating colleagues on their work to finalize a transportation funding bill.
The memo said lawmakers have made “significant progress” on a sprawling funding concept first introduced in April. That proposal could raise $1 billion a year via an increase to the state gas tax and other tax and fee hikes.
Then McLain and Gorsek mentioned some new possibilities. Among the issues under discussion, according to the memo, is scrapping the state’s existing emissions reduction program and replacing it with a cap-and-trade system now favored by some industry and utility players.
The development is head-snapping for a couple of reasons.
First, it’s an enormously complex idea being floated late in the five-month-long legislative session. Lawmakers only have about five weeks left to complete their work.
Second, the push for cap-and-trade is coming from some of the same industry players who helped kill the proposal in both the 2019 and 2020 legislative sessions. In both of those years, Republican lawmakers launched walkouts that tanked cap-and-trade bills, and led then-Gov. Kate Brown to issue an executive order implementing her own policy.
But some of the entities that will be regulated under that system, the Climate Protection Program, say it’s too rigid. Natural gas utility NW Natural, a lead plaintiff in a lawsuit that delayed the state program, is among those most pushing a shift to a cap-and-trade system. The utility ultimately supported cap-and-trade bills Democrats put forward in 2019 and 2020.
Both Washington and California have cap-and-trade programs, and early talks in Oregon have involved adopting a law similar to Washington’s, according to one person involved in discussions.
The upshot of such a system for Oregon would be new revenue raised by the money that so-called “allowances” for permission to pollute would fetch at auction.
It’s not clear how much money that might be. But according to the memo from Gorsek and McLain, cap-and-trade revenue could be spent in a number of ways.
Funds generated from gas and diesel suppliers could pay for road projects, they wrote. Money raised elsewhere could go toward wildfires, climate nonprofits, and transit or pedestrian uses.
Even murkier than how much a cap-and-trade system might raise are its political prospects.
It’s not clear that the promise of money for roads or fires would sway Republicans who twice walked out over the same policy, or Democrats who might favor the current system. Lobbyists involved in discussions offered a dim view this week that any agreement could be found before lawmakers are constitutionally required to adjourn June 29th.
“We’ll see how far we make it,” Wagner, D-Lake Oswego, told OPB on Thursday. “I think it’s important that we have an open mind about this.”
The fact that Washington has now instituted a cap-and-trade system could give the idea new political momentum in Oregon, Wagner said. “The idea of being part of a West Coast market, I think, is pretty appealing to a lot of people.”
Two influential voices in the discussion are already expressing misgivings – or outright opposition.
Environmental groups have not been included in discussions so far. On Thursday, some said the notion of using money from such a system to fund road and bridge projects that could exacerbate climate change was a nonstarter.
The state’s current Climate Protection Program puts its revenues into projects that reduce greenhouse gas emissions.
“What we see here is our Legislature taking advice from the fossil fuel industry to create policy that ends up in a giveaway to the fossil fuel industry,” said Carra Sahler, director and staff attorney at Lewis & Clark Law School’s Green Energy Institute. “I’m appalled.”
Even some business interests that haven’t been fans of the state’s current regulatory framework are dubious.
Oregon Business & Industry, the state’s largest business lobby, sent an internal email Wednesday offering members a rundown of the issue.
“It is unclear whether there is enough time left in this session to develop a workable cap-and-trade proposal to supplant the CPP, especially one that addresses the complexity of a program that differentially impacts a variety of stakeholders,” OBI Senior Policy Director Sharla Moffett wrote. “It’s even less clear whether lawmakers have the appetite for linking such an ambitious effort to a transportation package that already faces its own set of political challenges.”
Gov. Tina Kotek, who fought twice to pass cap-and-trade as House Speaker, had a brief response Thursday. The governor, her office said, “looks forward to reviewing the details of the proposal.”
Correction: This story has been updated to reflect that NW Natural supported past cap-and-trade proposals. An earlier story misstated that position. OPB regrets the error.
