Oregon Republicans killed cap and trade this year. Now, they'll have to contend with cap and reduce.
Closing a loop on a pledge she made last year, Gov. Kate Brown issued an executive order Tuesday that aims to sharply curb greenhouse gas emissions with a full-court press by government agencies.
The 14-page order comes less than a week after a Republican walkout killed Senate Bill 1530, Democrats' signature proposal for a cap-and-trade system in Oregon. It contains ambitions that are at once equal to and much broader than that bill.
“The executive branch has a responsibility to the electorate, and a scientific, economic, and moral imperative to reduce [greenhouse gas] emissions,” the order says, “and to reduce the worst risks of climate change and ocean acidification for future generations.”
Like SB 1530, Brown’s order updates the state’s carbon reduction goals, setting targets of a 45% reduction below 1990 levels by 2035, and an 80% reduction by 2050. But its path to those goals extends well beyond the regulations in the legislative proposal.
Brown’s order, for instance, directs agencies to alter building codes to prioritize energy efficiency, and to further ratchet down the carbon intensity of gasoline. It has provisions for updated energy efficiency standards for appliances and directives for reducing food waste.
In total, the action impacts 19 state agencies and commissions, directing a large portion of the state’s bureaucracy to do its work with an eye toward reducing emissions. That sweeping nature is certain to make it a target — both legally and rhetorically — of Republicans and industry groups.
“This executive order is extensive and thorough, taking the boldest actions available to lower greenhouse gas emissions under current state laws,” Brown said in a statement. “As a state, we will pursue every option available under existing law to combat the effects of climate change and put Oregon on a path we can be proud to leave behind for our children."
For its differences to SB 1530, a central piece of Brown’s order bears a resemblance to the primary enforcement mechanism in the scuttled bill. Under the order, carbon polluters in the industrial, transportation and natural gas sectors would have their emissions capped by the state’s Environmental Quality Commission and Department of Environmental Quality, with allowable emissions reduced over time.
The exact rules would be the subject of an intensive rule-making process — one that lawmakers on Monday approved $5 million in emergency funds to jump start. But state officials in the past have discussed issuing permits that polluters must obtain for their emissions, with a declining amount of available permits over time.
That’s similar to a system of “allowances” under SB 1530 that companies would have been required to purchase at auction. But environmental groups have argued a system created under an executive order would not be as flexible for polluters, and could prove more expensive. It remains to be seen whether carve outs for some entities — which were included in SB 1530 — will be included in the eventual rules.
It’s also not clear whether the state would charge for permits under Brown’s order, a step likely to raise objections from opponents who warn of cost increases.
Unlike SB 1530, Brown's Carbon Policy Office has said in the past any system created by executive order would not be able to raise hundreds of millions of dollars that could be spent helping Oregonians adapt to a low-carbon economy and mitigate the impacts of climate change.
The DEQ is required to submit a final report on its options for such a system by June 30. The cap and reduce provisions are slated to take effect “no later than January 1, 2022,” the same time SB 1530’s regulations were expected to come online.
Here are some other notable provisions in Brown’s order:
Stronger fuels standard
Brown is directing the Department of Environmental Quality and Environmental Quality Commission to ratchet up restrictions for how emissions intensive fuel can be. She has set a goal of reducing emissions "per unit of fuel energy" to 20% below 2015 levels by 2030, and 25% by 2035. "This is the most ambitious goal for clean fuels in the country, and it will substantially reduce carbon emissions in the transportation sector, using a model proven to reduce pollution at a very minimal cost," a release from the governor's office said.
Electric utilities face scrutiny
SB 1530 would have subjected electric utilities to the cap-and-trade system, but Brown is more limited in her options. Her order directs the state’s Public Utility Commission to place emphasis on greenhouse gas emissions and wildfire risk when regulating power companies in the state. This lack of hard, declining caps on power companies could make it more difficult for the state to achieve its targets. Power companies would also be incentivized to expand adoption of electric vehicles in Oregon.
More efficient buildings
Brown has directed the Department of Consumer and Business Services to set “building energy efficiency goals” for new construction. Those goals need to aim for at least a 60% reduction in annual energy consumption in new buildings, compared to 2006 building codes.
More efficient household appliances
The order directs the Department of Energy to update its energy efficiency standards “at least to levels equivalent to the most stringent standards among West Coast jurisdictions.” Products covered include computers, lamps, faucets, dishwashers, fans and more.
Focus on electric vehicles and transportation
The state's Department of Administrative Services will develop a plan to swap out the state’s existing automobile fleet with zero-emissions vehicles and add charging stations at public buildings. At the same time, the Department of Transportation is required to conduct a statewide analysis of what infrastructure the state needs to expand use of EVs, and must begin evaluating the greenhouse gas impacts of transportation projects as part of its planning.
Brown’s order is nearly a year in the making. Shortly after a cap-and-trade proposal, House Bill 2020, failed to pass the state Senate in 2019, the governor vowed to consider executive action. The laundry list of actions in the order is similar to a set of proposals the group Climate Solutions made in November, when it argued Brown must act if lawmakers failed to pass a cap and trade bill in 2020.
"Significant change doesn't have to take the form of a single step," Brown said at a signing ceremony for the order Tuesday. "It can happen when several actions add up, and that's what I'm doing today."
Brown's announcement was met with praise from legislative Democrats and a wide array of climate groups.
"After years of obstruction by Republicans and the corporate pollution lobby, today is the day we say no more and take action for future generations," House Majority Leader Barbara Smith Warner, D-Portland, said in a statement.
Taken as a whole, the governor’s office says the executive order charts a course for the state to meet its new, more aggressive goals for greenhouse gas reduction. The state has not been able to meet its current targets.
“We’re creating that climate lens to really focus and direct the executive branch toward those goals,” said Kristen Sheeran, director of the Carbon Policy Office. “We’ve got the cap-and reduce-part that’s a directive to the Environmental Quality Commission, but then we’re layering all these other pieces on top of that.”
After working extensively with the Oregon Department of Justice, the governor’s office says it has bulletproofed its proposal against legal challenges. That likely won’t be enough to ward them off.
As Brown signaled her intentions in recent days, promises of costly litigation have been raised by both industrial and Republican opponents.
“I’d say there is a high likelihood that we’re going to end up in court,” said Shaun Jillions, an industry lobbyist who has been among the cap and trade’s most forceful opponents.
On Tuesday, a trade group affiliated with Jillions’ clients was quick to criticize the order.
"The effort to implement an expansive program without legislative approval is problematic on many fronts and sets a concerning precedent for how our state government will operate in the future," read a statement issued by the group. "Rather than accepting compromises that were proposed over the last two years, her administration has unfortunately decided to move forward on a path that will put taxpayers on the hook for significant litigation costs, with outcomes that are far from certain."
Another opponent, Senate Minority Leader Herman Baertschiger Jr., R-Grants Pass, has repeatedly predicted the governor will lose a lawsuit, though he hasn’t seen the details.
“All this is going to do is just initiate a whole bunch of lawsuits,” Baerstchiger said Monday. “I’m afraid that this is going to be a great waste of the taxpayers' money.”
Brown had a retort ready on Tuesday.
"If opponents to my executive order are really concerned about the cost of litigation — particularly Republicans — they should have stayed in the Capitol and completed their work and done their job," she said, to cheers from gathered students.
As OPB first reported, Brown's office says its case has been strengthened by the repeated walkouts by Senate Republicans like Baertschiger, which have helped kill the past two cap and trade proposals before the legislative branch of government.
Those walkouts could convince courts that “the Legislature is simply incapable of acting on these issues, and that the executive branch is the only branch capable of acting on climate,” Brown’s general counsel, Dustin Buehler, wrote in a recent memo. “That dynamic, in turn, could make Oregon courts more comfortable upholding the validity of executive action on climate.”