With the governor showing support and Republicans hoping to hit the brakes, Oregonians got their first look Thursday at a sweeping proposal to sharply reduce the state’s greenhouse gas emissions by 2050.
The 98-page bill sketches out how Oregon could use a cap-and-trade system to both force air pollution to a level far below the state's 1990 emissions and generate money to help pay for projects and initiatives aimed at smoothing the transition to a low-carbon economy.
The release of the so-called "Clean Energy Jobs" bill has been keenly anticipated for weeks. After years of discussion, the state's top Democrats are making the bill's passage a priority this year as they enjoy supermajorities in both legislative chambers. Meanwhile, Republicans and business groups have bristled at an idea they believe will raise costs for Oregonians but contribute very little to actually curbing climate change.
The policy is complicated, but the gist is relatively simple: The state will set a cap on greenhouse gas emissions beginning in 2021 and sell to the state’s largest polluters — those with more than 25,000 tons of carbon-equivalent emissions a year — an “allowance” for each ton of pollution they emit.
How much polluters pay per ton would be decided at auction. Companies with more allowances than they can use would be able to trade them to others. Revenue from the pollution credits would be spent, ideally, helping Oregon adapt to climate change and further reduce emissions.
Here are some takeaways from the proposal, which will be formally unveiled at a hearing Friday:
2035 Goal In Place: It's long been clear that the ultimate goal of the cap-and-trade policy would be to decrease greenhouse gas emissions to a level 80 percent below 1990 emissions by 2050.
What many environmental advocates wondered is whether the proposal would have another, interim goal prior to 2050. The policy unveiled Thursday does have such a goal, specifying that Oregon wants to reach levels 45 percent below 1990 emissions by 2035.
Free Credits For Utilities: Under the proposal, utilities such as Pacific Power and Portland General Electric wouldn't have to purchase credits for each ton of pollution they emit until 2030. Instead, they'd be given allowances, a concept known as "direct allocation."
The companies have argued for those free credits because they're already reducing greenhouse gas emissions under a law the Legislature passed in 2016.
“Given that our customers are already paying for investments in clean energy to bring our emissions down, we believe we should have direct allocation,” PGE spokesman Steve Corson said Thursday, before the proposal was released. Renew Oregon, a coalition that’s been pushing for a stiff cap-and-trade policy, has said such a move would be too generous.
Natural gas utilities would also be eligible for free credits, though those would be tied to emissions related to low-income residential customers.
Other Industries Eligible For Giveaways: The proposal contains a long list of industries that are deemed "emissions-intensive, trade-exposed." That is, they are big polluters, but they also might easily be tempted to move out of state if regulations put them at a competitive disadvantage. These industries include fruit juice makers, plastics producers, iron and steel mills, paper mills, semiconductor makers and many more. They'd be given 100 percent free allowances in 2021, then be eligible for a declining number of freebies each year.
Semiconductor Carve Out: Semiconductor makers like Intel get a special mention in the proposal. For a period of five years, they would not have to pay for emitting fluorocarbons, which are released in the manufacturing process.
Plane, Train And Boat Fuel Exempt: The biggest segment of Oregon's greenhouse gas emissions — 39 percent in 2016 — comes from transportation fuels. But while automobile fuel figures to account for much of the money the state takes in under cap and trade, aviation, watercraft and train fuel wouldn't be subject to the program.
Legal Challenges Fast-Tracked: State Sen. Michael Dembrow, D-Portland, a chief architect of the new proposal, acknowledged Thursday that there are legal questions around the bill. For instance, some contend it's a revenue-raising measure, which would require three-fifths support in the House and Senate to pass. The Legislature's attorneys have said it is not a revenue-raising measure.
There are also questions about how money raised from automotive fuel can be spent, given a provision in the state Constitution dictating such money go to roads and highways. Anticipating legal challenges, the bill contains provisions that would ensure any lawsuits on those questions go directly before the Oregon Supreme Court.
Even before the proposal was released Thursday, Republican lawmakers and some business interests were calling for a halt to the process. In a letter to top Democrats, House Minority Leader Carl Wilson, R-Grants Pass, and Senate Minority Leader Herman Baertschiger Jr., R-Grants Pass, requested a set of hearings around the state before moving forward.
The sentiment was shared by Partnership for Oregon Communities, a coalition that emerged to voice concerns about the forthcoming policy.
“At this point, there are dozens of unanswered questions about how this bill will impact employers, consumers and whether the program would be an effective tool in accomplishing our shared goal of continuing to improve Oregon’s environment,” spokesperson Preston Mann said in a statement. “Lawmakers’ next step should be to give every Oregonian a fair and equal opportunity to share their thoughts and shape this policy moving forward.”
Dembrow, the co-chair of the legislative committee that will debate the proposal, said Thursday that calls to tour the state were a stalling tactic.
"If people had been interested in a roadshow-type activity, I really wish they had brought that up six months ago," Dembrow said. He added that he and other bill supporters would be willing to attend public meetings in any part of the state.
Republicans and business groups had previously complained that Democrats have left them out of drafting a bill. A joint committee of lawmakers from both parties has met for months to study what a cap-and-trade policy should look like.
Gov. Kate Brown on Thursday issued a statement applauding the policy.
“It is encouraging to have reached this important milestone with a bill that reflects significant work on the part of legislators, advocates, and businesses across Oregon,” the statement read. “I look forward to further refinements through the legislative process to ensure the program achieves our climate goals while growing our economy."