'Cap and invest' bill takes shape
PORTLAND — Two Democratic lawmakers have released details of a carbon "cap and invest" bill that their party has prioritized for approval during Oregon's legislative session in February.
Modeled after a program in California, their proposal would effectively charge Oregon industry for emitting carbon dioxide into the atmosphere. The goal of the program is to encourage businesses to embrace technologies and practices that curb the release of greenhouse gases that warm the climate and to invest in projects that help the general population reduce their carbon footprint.
A similar bill in 2016 drew strong opposition from certain Oregon business groups, including Associated Oregon Industries, since merged into Oregon Business & Industry.
Since then, Democrats Sen. Michael Dembrow of Portland and Rep. Ken Helm of Beaverton, have assembled a series of work groups to address concerns from business and industry, environmentalists and advocates for minorities and residents of rural areas.
A bill summary released Wednesday outlines changes to the proposal that address some of those concerns.
"We have two competing needs: We want to reduce emissions, but we don't want to put businesses out of business so their progress is light in the early years," Dembrow said. "Heavy emitters that are at risk of competition from other states or countries that don't have high standards they are going to be given allowances in early years to help them transition into the program. We want to keep it predictable and not have rate shocks."
The bill is scheduled to be drafted by Jan. 8 and released to the public that same week. Some of the highlights of the changes are:About 20 percent of the hundreds of millions of dollars generated from carbon allowance sales would go toward projects only in rural areas, addressing a concern that a cap-and-invest law would largely benefit already-thriving urban centers, such as the Portland metro area. Some of the proceeds also could be used to pay for "carbon sequestration" on farms, which could involve changing cover plants or reducing soil disturbances. Rulemaking for the program will have legislative oversight. Some members of the business community resisted the idea of the Department of Environmental Quality having unilateral authority in rulemaking. Commissions and advisory groups on global warming would be consolidated into one advisory committee and one legislative committee.
Despite the changes, some business groups said they're still opposed to the idea.
Jenny Dresler, director of state public policy at the Oregon Farm Bureau, is a member of a coalition campaigning against cap and invest, Oregonians for Balanced Climate Policy.
"Oregon has made tremendous progress toward reducing our carbon emissions and is now one of the cleanest economies in the country," Dresler said. "Driving up gas and energy prices on consumers, farmers and employers - as a cap and trade bill will do - will only result in fewer jobs and more pressure on family budgets. There are better ways to fight climate change, and Oregon is already at the forefront of that effort."
Mark Johnson, president and CEO of Oregon Business & Industry, said his organization is committed to reducing CO2 in the atmosphere, but the board of directors is opposed to the Legislature attempting to pass the bill during the 35-day session in February and March, because it "won't do justice to a concept as complicated as cap and trade and that has this many moving parts."
What's the cap, and what's the investment?
The cap limits the amount of carbon a business may emit to less than 25,000 tons of CO2 per year, beginning in 2021. Those that emit more than that amount — currently about 100 businesses in Oregon — would be required to buy market-priced allowances for the excess. The program essentially puts a "price" on emissions.
Meanwhile, the allowances would be sold at a North American auction and generate revenue that would then be invested in projects that slow climate change.
Supporters say the bill could generate hundreds of millions of dollars a year for those projects.
Investments could include rebates for electric vehicles, solar panels on homes or safety improvements on bicycle lanes, among other things, said Brad Reed of environmental advocacy group Renew Oregon.
"Oregonians really value where we live and making a cleaner economy. … Once those investments start to show, then people are going to understand how beneficial this program is going to be," Reed said.
How much would it cost?
Cost estimates for starting the program have yet to be calculated. That process will begin once the bill is finished, Dembrow said.
The state will achieve some cost savings by participating in the same auction market as California and the Canadian provinces of Quebec and Ontario, the senator said.
The program will drive up the cost of fuel and electricity. Electric rates could climb by about 1 to 3 percent, Dembrow said. It's unclear how much fuel prices could increase.
A study by the Oregon Department of Environmental Quality indicated the costs could have an inordinate effect on people in low-income and rural communities because they already spend a larger percent of their income on fuel.
Dembrow has proposed using another chunk of the program's proceeds for utility payment assistance for low-income Oregonians.