Oregon’s cap-and-invest program clears first legislative hurdle

By Pam Kiely, Sr. Director of Regulatory Strategy for U.S. Climate, and Katelyn Roedner Sutter, Manager for U.S. Climate

Mount Hood, Oregon. Image by David Mark from Pixabay.com

Oregon today advanced nationally-leading policy that would catapult Oregon into the top-tier of U.S. states taking ambitious climate action.

The cap-and-invest bill (HB 2020), which passed 8-5 out of its first committee late Friday afternoon, places a firm limit on the state’s climate pollution while ensuring continued investments in resilient communities, green jobs and clean energy.

Oregon’s cap-and-invest program sets the bar for what true climate leadership demands: putting in place policies that actually will achieve pollution reductions consistent with what scientists say is necessary to prevent catastrophic climate change.

Overview of cap-and-invest program

Here are the highlights of Oregon’s cap-and-invest program, HB 2020:

  • Targets for emission reductions: Oregon’s cap-and-invest program would set two binding emission reduction targets: 45% below 1990 levels by 2035, and 80% below 1990 levels by 2050. These ambitious targets are in line with recommendations from the Intergovernmental Panel on Climate Change to keep increases in global temperature below 1.5 degrees Celsius. With HB 2020, Oregon is doing its part to avert catastrophic global warming.
  • Cap that limits pollution: Cap and invest would put a firm and declining limit on climate pollution, which is essential to ensuring the state meets those binding emission reduction targets. The cap helps guarantee that emissions stay below allowed levels, and coupled with the stringency of the 2035 target, achieves emission reductions early in the program. Early reductions are far more critical for the atmosphere, and any policy developed today should be tested against the reductions it can achieve over the next decade.
  • Covers all major sectors: Oregon’s proposed program includes all major emitting sectors, including transportation, industry, and electricity. Broad program coverage ensures that the state can achieve its reduction objectives: all sectors are faced with an incentive to innovate and reduce climate pollution, and the coverage enables the state to go further, faster in reducing emissions.
  • Designed to facilitate collaboration with other state programs: Cap and invest in Oregon is designed to facilitate potential linkage with California and Quebec under the Western Climate Initiative in the future—as well as other jurisdictions that may adopt similar policy mechanisms to achieve their own reduction targets—but importantly it is also built with the specific needs of Oregonians in mind. For example, 10% of the revenue from cap and invest is dedicated to supporting the state’s tribal communities.

Why HB 2020 is significant for Oregon and the United States

Oregon’s cap-and-invest program is ready for the big leagues: it has been thoughtfully-designed to benefit Oregonians while providing a powerful signal to the rest of the U.S. that all states have a role to play in reducing U.S. emissions.

Here’s why HB 2020 should make its way to the finish line, Governor Kate Brown’s desk.

  1. Tackles the biggest source of the problem: Transportation is the largest source of emissions in Oregon, and pollution from this sector is increasing. Including emissions from transportation fuels under the cap in HB 2020 is critically important to reducing transportation-sector pollution. Oregon recognizes we no longer have time to delay, and pollution from transportation is part of cap and invest from Day One. This is an absolutely necessary step toward addressing rising transportation emissions while also encouraging the shift toward cleaner vehicles. A cap on this sector will be a powerful complement to other policy efforts in Oregon designed to facilitate the deployment of electric vehicles and invest in cleaner fuels.
  2. Improves local air quality: Transportation emissions not only contribute to climate pollution, they also impact local air quality. Communities near freeways and freight facilities breathe some of the worst air, and that directly harms the health of residents, especially children and elderly adults. HB 2020 creates a framework that will accelerate the electrification of our cars, trucks, and buses—an outcome that will not only improve the climate, but makes it easier for these residents to breathe.
  3. Sets bar for transformative climate leadership: Cap and invest represents serious climate leadership from Governor Kate Brown and Legislative leaders. At a time when climate progress is stagnating in Washington, DC, states need to step up. Recent legislative action in Colorado, and legislative progress and administrative commitments in New Mexico show that more policymakers are beginning to understand that what matters are guaranteed reductions in pollution—and with HB 2020 Oregon would be at the head of that lineup. Just as importantly, Oregon’s leadership demonstrates to other states that they too can take bold action to address climate change, and shows tools exist that can be tailored to state circumstances that are capable of achieving the reductions required.
  4. Delivers urgently needed action: Oregonians are already suffering the impacts of climate change, and the need for action is urgent. 2018 was a record year for wildfires in the state, and as temperatures rise and rainfall is less dependable, this threat to communities and forest health will only escalate. Rising ocean temperatures and ocean acidification also threaten Oregon’s commercial fishing industry, coastal communities, and scenic beaches. Limiting greenhouse gas emissions is fundamental to addressing climate change.

Committee passage and what’s next

The Joint Committee on Carbon Reduction has been developing the cap and invest policy for well over a year, holding hearings, consulting stakeholders, and learning from successful programs in Quebec, California and in the Northeastern United States.

Passing this bill would show a very clear path forward for other states who need to get serious about delivering real reductions on a near-term timeline.

Now that the Joint Committee on Carbon Reduction has endorsed HB 2020, the bill has one more committee stop in Ways and Means before moving on to the full Oregon House of Representatives, and then Senate, for a vote. While these legislative processes always have unexpected surprises, Oregon’s legislative leadership has made clear that cap and invest is a top priority in the 2019 session. It is critical that they deliver this bill intact to Governor Brown’s desk.

Committee Co-Chairs Senator Michael Dembrow and Representative Karin Power have led the charge, deftly managing to develop a policy that balances strong environmental outcomes with thoughtful considerations for Oregonian interests—creating a true model for comprehensive action. And Governor Kate Brown’s leadership has been instrumental, underscoring the importance of strong executive leadership in developing and advancing ambitious policy in partnership with the legislative branch—the type of leadership and engagement that can serve as a template for freshman Governors who ran on platforms of climate leadership.

Oregon has an impressive legacy as an environmental leader, and Governors across the country are making bold commitments around pollution reduction. But many haven’t yet figured out how to translate those commitments into mandatory policies that actually achieve the necessary reductions. Passing HB 2020 would make Oregon the leader of the pack—and show a very clear path forward for other states who need to get serious about delivering real reductions on a near-term timeline.

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One Comment

  1. Eric Strid
    Posted May 20, 2019 at 10:32 am | Permalink

    I take issue with these glowing critiques of carbon pricing systems, because they all lack evidence of causing significant emissions reductions (see Food and Water Watch reports on the BC carbon tax). A politically feasible price level (<$30/MTCO2e) for current emissions is far too low to affect demand, so advocates point to using the revenue on emission-reduction projects ("invest"). That's nice, but terribly inefficient compared to simple mandates or the marginal abatement costs demonstrated by the CT and NY green banks or other policies.

    You state that HB 2020 tackles transportation, the biggest emissions sector. Unfortunately, the Oregon state constitution restricts all fees on vehicles and fuels to be spent on highway infrastructure, which severely limits the investment of the main HB 2020 revenue generation from being used to invest in EVs. Look to Norway's emission taxes on new vehicles for how to seriously reduce vehicle emissions.

    In short, any carbon pricing system that prices current emissions (as opposed to future emissions) is too little, too late to address our climate emergency. EDF's policy analyses and strategy need to adapt to the times.

    And I don't think Oregon is or would be leading state climate policies with passage of 2020. Specific shortcomings of Oregon policies include:
    * Legislated statewide GHG reduction targets, both existing and proposed, fall significantly short of IPCC recommendations.
    * Electricity RPS targets now lag well behind other states with 100% targets: HI, CA, NV, WA, NM,…
    * No community solar rules (yet…); no Community Choice Aggregation options and a playing field tilted against third-party renewable energy suppliers; no charter for OPUC to reduce GHG emissions.
    * Cap and invest has limited sector coverage and no track record of causing significant emission reductions. It also creates an ideological bias toward pricing current emissions, as opposed to far more effective policies such as simple mandates or pricing future emissions.
    * The ZEV program requires only about 8% EV market share by 2025, far below most business-as-usual EV forecasts (Oregon is around 3% already, and China is on track for 50% by 2025).
    * Oregon’s Clean Fuels Program targets do achieve emission reductions equivalent to China’s EV adoption rate through about 2025, although the program enables and encourages continued use of combustion engines in reducing emissions.
    * No RPS for natural gas utilities.
    * No (or limited?) targets for carbon sequestration in forests or improvements in agricultural processes.
    * No legislated limits on large fossil-fuel infrastructure, such as Portland has implemented. As a result, dangerous Bakken and tar-sands crude oil trains travel through Portland and we’ve spent more than a decade trying to stop disastrous LNG terminals in Coos Bay.