Interest groups respond to ‘cap-and-invest’ bill

Oregon Democrats have released the first draft of a bill that would require industries emitting more than 25,000 tons of carbon dioxide to buy market-priced credits. The state would use proceeds from the sale of credits to fund climate-related projects.

SALEM — State lawmakers have released the first draft of a bill to charge Oregon industries for emitting carbon dioxide into the atmosphere and to use the revenue to invest in projects meant to slow climate change.

The state’s “cap-and-invest” bill emerges after several years of work and coincides with an announcement from Washington lawmakers for a similar program in their state. The bill will be considered during the Legislature’s policymaking session in February. Democrats have identified the legislation as a top priority for the session.

Modeled after a program in California, Oregon’s so-called “Clean Energy Jobs” bill would set a cap of less than 25,000 tons of CO2 per year for each company, beginning in 2021.

“In other words, your favorite brewery or grocery store down the street will not fall under the cap, only the largest polluters in the state,” said Brad Reed of Renew Oregon, a leading proponent of the bill. “The cap will decline over time through 2050 to ensure we reach our reduction targets and provide certainty for business.”

The estimated 100 Oregon companies that emit more than that amount would be required to buy market-priced allowances for the excess. The “price” on emissions is designed to encourage businesses to adopt technologies and practices that reduce their carbon footprint. The allowances would be sold at a North American auction and generate revenue that would be invested in green-energy and environmentally friendly agriculture projects.

The program would eventually generate hundreds of millions of dollars in revenue that would be invested in projects that slow climate change. The exact cost of the program has yet to be calculated, he said. But previous estimates pegged revenue at about $700 million per year.

Investments could include rebates for electric vehicles, solar panels on homes or safety improvements on bicycle lanes, among other things, Reed has said.

Carbon trading markets are gaining momentum around the globe. China has plans to launch a carbon market later this year that would account for about a quarter of that country’s industrial emissions, according to E & E News, a Washington, D.C., environment and energy publication.

A cap-and-invest bill in 2016 drew strong opposition from certain Oregon business groups, including Associated Oregon Industries, since merged into Oregon Business & Industry.

Mark Johnson, the group’s president and CEO, said the program would drive up prices on consumers and drive away businesses from the state.

“Unfortunately, the legislation introduced (Monday) is an example of misplaced priorities,” Johnson said. “Greenhouse gas emissions are decreasing, while Oregon’s fiscal crisis is worsening. Rather than pushing a complex, costly program to address an issue that businesses already are making progress on, legislators need to focus on a problem only they can fix — Oregon’s fiscal instability.”

Tom Koehler, co-found of Pacific Ethanol and secretary of the Oregon Business Alliance on Climate, said he supports moving forward on the legislation this year.

“There is a fundamental decision that needs to be made now and not danced around: Do we believe the climate crisis is real and are we ready to do our part to make a difference?” Koehler said.

“We believe action now will benefit Oregon’s economy and its citizens.”

State Sen. Michael Dembrow of Portland and Rep. Ken Helm of Beaverton assembled a series of work groups to address concerns from business and industry, environmentalists and advocates for minorities and residents of rural areas. The Democrats said they added several provisions to the bill designed to help businesses stay competitive, including dedicating 20 percent of revenue to job-generating projects in rural areas and legislative oversight of rule-making to ensure rules don’t put companies out of business.

The Senate Committee on Environment and Natural Resources, which Dembrow chairs, will hear testimony on the bill today at the Capitol.

No cap-and-trade system in the world has resulted in significant emissions reductions, in part because caps still remain relatively high and businesses haven’t had to pay out a lot of money, according to E & E News. But the programs have “served as political consensus builders that have gotten industry accustomed to climate policies,” E & E News’s Debra Kahn wrote in December.

Consumers could see an increase in the cost of fuel and electricity as a result of any program. Electricity rates, for example, could climb by about 1 to 3 percent, Dembrow said.

A study by the state 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 share of their income on fuel.

Dembrow has proposed using some of the program’s proceeds for utility payment assistance for low-income Oregonians.

The Capital Bureau is a collaboration between EO Media Group and Pamplin Media Group.

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