Following Republican walkouts in 2019 and 2020 that denied a vote on Oregon’s new cap-and-trade rules designed to reduce greenhouse gas emissions, state officials went from forward and drafted the new framework anyway at the request of an executive order from Governor Kate Brown. in 2020.
The new rules took effect earlier this year, but they’re so new that even many officials don’t know much about them – or how they worked their way into state government. Oregon’s Climate Protection Program Framework, whose ultimate goal is to reduce statewide emissions to 80% below 1990 levels by 2050, will be strengthened over the course of the next decade.
The program essentially sets caps on greenhouse gas emissions for fossil fuel and power producers in Oregon. The caps are based on metric tons of carbon dioxide emitted and are expected to decline in three-year phases. Currently, the cap is set at 200,000 tonnes per emitter, which will decrease to 100,000 from 2025 and then to 25,000 tonnes by 2031.
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The current cap applies to some of the state’s largest energy producers, such as Northwest Natural Gas and BP Products North America Inc. But, as the caps come down, they will apply to more and more of entities, even ‘fixed emitters’ which pollute. as a by-product of their activities, such as cement manufacturers and steelmakers.
The State issues so-called compliance instruments free of charge to companies, which are based on the current ceilings and then distributed among the entities. The state has abandoned its earlier plans to auction off these compliance instruments.
If companies cannot meet the targets, they may be subject to civil penalties or legal action, but the penalties do not come into effect until later phases.
Polluters can offset some of the excess by investing in projects or programs that strengthen Oregon’s green energy sector. But the percentage of emissions caps that can be circumvented by investments is also capped. Initially, entities will be able to offset 10% of their emissions caps with climate investments, and this will increase to 15% and 20% over subsequent three-year periods, while the state simultaneously tightens the amount of pollution allowed.
That’s the “cap” part of the system, but what about the “trade?” Entities can trade their compliance instruments between themselves or carry them over to the next three-year period by banking them, ostensibly allowing them to legally exceed their now lower maximums if they were lower than them before the new benchmark. The state will oversee this new marketplace that issues and tracks compliance instruments.
There are other elements of the state’s climate and green energy plans, including bolstering Oregon’s electric grid to meet future demand — another daunting task given the state also wants to incentivize more. people to buy and drive electric vehicles.
Justification and refutation
Officials say these measures are necessary both to protect Oregon from the compounded effects of climate change — like the dry conditions that lead to wildfires — and also to prepare the state’s economy for future market conditions. .
“If you think that at some point humanity is going to respond to this climate crisis and make this transition, … it’s probably better for a jurisdiction like ours to be at the forefront than to be at the forefront. tail,” Colin said. McConnaha, director of the Office of Greenhouse Gas Programs within the state Department of Environmental Quality.
“I don’t think Oregon is a forerunner in this area, but a forerunner. There are many reasons, scientific and economic, for jurisdictions to make this transition. »
But, while the caps apply to fossil fuel companies, higher costs at the top of supply chains have raised concerns that they will translate into higher costs for those at the bottom. Farmers and those who represent their interests in Salem fear that the added costs of local farming will affect their profits. Tractors run on diesel and natural gases such as propane and kerosene are common in agricultural sectors.
The Oregon Farm Bureau has come out against the program, saying it will increase the cost of fuel for farmers and the cost of fuel and home heating for homeowners.
“It’s going to really hit our bottom line during the time when the pandemic is already impacting the market,” said Mary Anne Cooper, OFB’s vice president of government affairs.
These additional costs lead to less competition in a domestic and global market, she added. People who would normally buy grass seed and produce from Oregon farmers could simply buy elsewhere, where there is no cap and trade framework.
In response, state officials say they are aware and will try to limit “leaks,” or that the companies themselves are moving their operations to other states. This is one of the reasons cited by the Oregon Department of Environmental Quality for allowing investment offsets, as well as issuing compliance instruments for free rather than at auction as other cap and trade markets.
History of cap & trade in Oregon
These are not new concerns; they have been part of the opposition to a cap and trade program for 15 years. The state began studying emissions standards and ways to reduce Oregon’s share of pollution in 2007, and paid for another climate assessment in 2013. These efforts led to the establishment of targets for reduction in emissions in 2017.
But lawmakers and climate officials worried that Oregon was still far from meeting those goals — hence the emphasis on a cap-and-trade framework that essentially forces the state’s biggest polluters to emit less carbon dioxide.
This led to legislative bills that would have implemented this cap and trade program, which in turn led to high-profile walkouts by Republican lawmakers in 2019 and 2020, denying a vote on the bills. .
In response, Governor Brown issued an executive order in March 2020, directing the Department of Environmental Quality to write the rules over an 18-month period. Dozens of hearings and thousands of public comments later, Oregon is the latest state to adopt cap and trade.
This process of circumventing a floor vote has angered Republican lawmakers. Rep. Shelly Boshart Davis, R-Albany, whose district covers rural Linn County, agrees with the farm offices position.
“While this is an executive action and not a legislative action, she is disappointed that the governor bypassed the legislative process and passed this program as a rule,” said Renee Perry, chief executive officer. office of Boshart Davis, by e-mail.
Others are watching eagerly to see if the ramifications for local farmers actually materialize, especially in Linn County, the “Grass Seed Capital of the World.”
“Cap and trade in general has been a concern,” said longtime Linn County Commissioner Roger Nyquist, a staunch Republican. “Any program must show common sense and balance. Many things we have seen are insufficient. So we will initiate the process, whether it is an administrative rules process or legislation.
“And expecting a guy who is 85 and has been driving the same tractor all these years to get off and park it is not feasible or realistic.”
Those who drafted the new rules say the investment component is a way to offset that challenge for people in rural Oregon.
“With that money, they pay for additional community climate investments,” McConnaha said. “This money is being invested in communities in Oregon that are less able to make this transition. Farming communities are in this mix.
Others reject this assertion.
“For us, it never got close to a place where we weren’t going to see serious negative impacts on farmers and rural workers in Oregon,” Cooper of the Farm Bureau said.
She and other opponents say they would have liked a system that focused more on carbon sequestration practices, such as all-till or no-till farming and cover cropping, which are ways to sequester carbon. methane and other carbon gases underground instead of allowing them to rise into the atmosphere.
State officials say this is also part of the state’s climate actions, but these practices would not have a large enough effect on Oregon’s greenhouse gas emissions.
“This program clashes with the perception that it’s the only emissions reduction policy in Oregon, but, for better or worse, it’s not,” McConnaha said. “It’s just a tool in our tool belt.”
Another point of opposition is that Oregon is a relatively low emitter in the United States and globally, therefore critics say the climate plan is too aggressive an approach for a state like Oregon.
Officials counter that is no reason not to cut emissions, especially given the greater consequences of climate change. And those emissions targets are based on 2013 science rather than the latest global climate research conducted in 2019.
“As for Oregon’s relatively small share, … any jurisdiction could claim that, and if we all make that claim, then nothing is being done to address climate change,” McConnaha said. “And, in fact, the latest science says we should go even further and faster than it was when these rules were created.”
Troy Shinn covers health care, natural resources and Linn County government. He can be reached at 541-812-6114 or [email protected] He can be found on Twitter at @troydshinn.