Testing climate leadership with cap and trade

As an avowed climate change denier moves into the White House, proponents of emissions reductions policies are pinning their hopes even more on the states.

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In Oregon environmental advocates hope a market-based emissions trading program will help accelerate climate leadership.

Sen. Lee Beyer, D-Springfield, has introduced a cap and trade bill that would set new statewide emissions goals for 2025, along with pollution caps for 2035 and 2050. Companies and plants emitting more than 25,000 metric tons of carbon dioxide a year would be required to buy allowances from the state to cover each metric ton of emissions.

The cap and trade system would add a pricing component to climate regulations already approved by the Oregon Legislature. A controversial low-carbon fuel standard passed in 2015. Policy makers also struck an eleventh hour deal last spring to enable the Oregon Clean Electricity Plan, which prohibits electricity from coal-fired plants and requires utilities to use renewable energy for half of their supply by 2040.

On their own, these two programs are not enough, says Sean Penrith, director of the Climate Trust. Oregon is already running 20% short of meeting its 2020 emissions reductions goals, he says, impeding progress toward longer term goals.

Oregon is not the only state failing to meet reduction targets. A New York Times article published yesterday reports lagging progress on “decarbonization,” even among states that have taken the lead enacting emissions reductions policies.

“Most of the gains in the United States have come relatively easily, not from the deployment of renewables but from the wholesale switch from coal to cheaper and cleaner natural gas,” the article states. “Much of that transition has played itself out, however.”

While the Times article highlights nuclear power as the way forward, Oregon advocates hope carbon pricing will be the next phase here.

The Oregon Department of Environmental Quality recently released a draft study analyzing the impact of a carbon pollution market. The study found that capping and trading emissions, a system California implemented in 2012, would be a cost effective way to limit greenhouse gas emissions.  

About 100 Oregon companies would be impacted, and effects on the state economy would likely be small, the study said. 

Many emitters are withholding support. Ry Schwark, a spokesperson for PacifiCorp, says the utility does not endorse a cap and trade program. “We got behind the Clean Electricity and Coal Transition Act,” he says, “which we think is a much better way to reduce carbon emissions.”

Pointing to comments PacifiCorp appended to the DEQ report, Schwark says the interconnected nature of electricity markets makes it difficult for states to act alone in regulating carbon.

“The higher level you do these things the better.”

Penrith says linking cap and trade to existing policies is critical to the success of an emissions reduction system.

“The effectiveness of a cap and trade is if it is accompanied by a set of targeted programs,” he says. “Cap and trade on its own is useless. It’s much more beneficial to have clean fuels and renewable fuels in place.”

Cap and trade comprises only 18% of targeted reductions in California, Penrith says. 

“As the other programs perform,” Penrith said, “the cap and trade efficiency will step in or back off. The word complementary is not used lightly.”

A final draft of the DEQ report will be presented to legislators in February. Other carbon pricing schemes, including a carbon tax, will likely be part of the discussion.

One question is whether carbon fees will get traction this year as legislators grapple with high profile issues like pension and tax reform and a transportation package. And many Republicans are still fuming over the Clean Fuels program, which they hoped to repeal last session as part of a failed deal to pass a transportation funding package.

Bryan Hockaday, a spokesperson for Gov. Kate Brown, said the governor doesn’t comment on bills that have yet to make it to her desk. But he said carbon pricing has been adopted by other jurisdictions as an approach to reduce harmful carbon emissions and incentivize clean energy alternatives to help reach greenhouse gas reduction goals.

“Most recently in her inaugural address, Governor Brown reiterated her commitment to leading Oregon to meet the challenge of climate change,” Hockaday said in an email. “Governor Brown will continue to pursue effective strategies to mitigate the impacts of climate change and create a cleaner energy mix of the future, and she looks forward to working with the legislature toward this shared vision.”

Data released today show that 2016 was the hottest year on the historical record and the third consecutive record-breaking year.