science environment

Oregon Cap And Trade Bill Sees Big Changes

By Dirk VanderHart (OPB)
March 25, 2019 11:59 p.m.

The “Intel exemption” is out, low-income drivers are in and a mess of freebies are on the table for some of Oregon’s largest polluters.

Those are a few key takeaways from a massive set of amendments state lawmakers unveiled Monday, as they work to adopt a cap-and-trade system to curb Oregon's greenhouse gas emissions.


Long awaited by interested parties on both sides of the debate over cap and trade, the 130-page amendment package would largely replace a first draft of House Bill 2020 released in January. Since that release, lawmakers have toured the state, sitting through hours of testimony from people who alternately pleaded with them to urgently address climate change and begged them to hold off on the hefty regulatory scheme.

“One of the things we heard in all of these public hearings was a lot of fear,” said state Sen. Michael Dembrow, D-Portland, a co-chair of the legislative committee working up the bill. “Fear about the consequences of climate change ... but we also heard fear from employees that are concerned about the possibility of losing their jobs.”

Under a cap-and-trade plan, the state's largest greenhouse gas emitters would be required to purchase credits, known as "allowances," for every ton of emissions they put out each year. A cap on overall emissions allowed in the state would decrease over time, eventually ensuring Oregon hits reduction goals by 2035 and 2050. Money from the program would be used to help the state further reduce emissions and deal with the effects of a changing climate.

The package unveiled Monday keeps many original provisions in place, adds more specificity to others, and completely reworks some key sections. Here are key changes:

No Break For Intel: Under the first bill, fluorocarbons emitted as part of the manufacture of semiconductors wouldn't be regulated under the cap-and-trade plan. That's now changed, though lawmakers suggested Monday they'd made that tweak grudgingly. "At every single public hearing we heard someone raise the optics of giving Intel a free pass, which I think was a little misinformed," said state Rep. Karin Power, D-Milwaukie, another key architect of the bill.


It's not just Intel and other semiconductor makers who've lost their exemption. A large waste-incineration plant in Marion County is also now targeted for regulation, after a campaign by environmental advocates concerned with pollution from the facility.

Fuel Rebates: Concerns that cap and trade would increase gas prices by more than 10 cents a gallon featured heavily in public hearings. Lawmakers are proposing returning up to $100 million a year in state revenues from the program to ease the burden on low-income Oregonians. They plan to propose a separate bill offering refunds to households that make less than Oregon's median income.

The refund isn't chump change. State revenue estimates for the first rendition of the bill suggested the state could anticipate between $446 million and $583 million a year during the first decade of the program. The amount being considered for fuel-related refunds could give back around one-fifth of that money.

New Giveaway Structure: In response to sharp outcry from facilities that said they might have to lay off workers or move out of state under a cap-and-trade system, lawmakers have hit on a new regulatory scheme. In the prior bill, polluters in certain industries were told to expect 100 percent free credits in 2021, the first year of the program. The number of free credits they'd receive thereafter would reduce each year.

The new amendments offer a more-complex scheme. Under the proposal, these same facilities would receive 95 percent free pollution credits for the first three years of the program. In every subsequent year they’d receive the same deal for greenhouse gas emissions tied to a state-set benchmark for using the “best available technology” for their industry. Facilities still using what the state considered outmoded, inefficient technology would theoretically have emissions well above that benchmark, and so would have to pay more.

“Those who are not using the best technology need more incentive to do so, and higher prices will give them that incentive,” Dembrow said. “It’s a carrot-and-stick approach.”

More Certainty In Spending: In a tweak pushed by some advocacy groups, the new bill specifically calls out rural communities, low-income communities and federally recognized tribes as beneficiaries of a prescribed percentage of spending from the program. The amendment also prioritizes specific investments in wildfire prevention and job training.

No Certainty For Natural Gas: One of the most serious objections to the initial cap-and-trade bill came from Northwest Natural, which said its customers could see big rate increases under the proposal, and pushed to be treated more like electric utilities under the plan. Power and Dembrow said Monday they are still working on a way to address those concerns.

The amendment package signals the priorities of Democratic leaders, who are confident they'll be able to pass a cap-and-trade bill this session after years of debate. But the proposal is just one of dozens of amendments that have been floated in recent weeks — many of them from Republican lawmakers who oppose the idea.

Most of those proposals are not yet public. How many of them will be taken up for consideration as lawmakers meet in coming weeks to hash out a final product is uncertain.