Will Oregon regulate carbon emissions?

The Oregon Legislature is again considering regulating carbon emissions, possibly in the form of a cap-and-trade system that would link to those already in place in California and Quebec.

The House and Senate environment committees kicked off the first of several joint hearings on the topic Monday with an overview of climate change and of carbon pricing options.

“Climate change is here. It’s going to impact us no matter what happens,” Kathie Dello, associate director of the Oregon Climate Change Research Institute, told lawmakers.

Oregon has been working to reduce its greenhouse gas emissions for a decade. A new report shows the state won’t meet its 2020 goal.

Earlier this month, the state Department of Environmental Quality completed a report on the impacts of a cap-and-trade program in Oregon.

The program would put a collective cap on greenhouse gas emissions statewide, then auction off allowances to emit those gases.

Businesses could sell or trade allowances, but eventually might find it cheaper to invest in carbon reduction technology.

Unlike a carbon tax or fee, a cap-and-trade program would allow Oregon to control how emissions are reduced, Palmer Mason, DEQ senior legislative advisor, told the committees.

That’s because the state would set the “cap,” while the price of allowances would be market-based. The state would gradually decrease the cap, resulting in allowances becoming more expensive.

About 100 businesses around the state would be regulated if the program covered fossil fuel and natural gas suppliers, electricity providers, and industrial emitters responsible for at least 25,000 tons of greenhouse gases per year.

Among those on the list: Chevron, Shell, NW Natural, PGE, Cascade Steel Rolling Mills, Georgia-Pacific Toledo, Oregon State University, Intel Corp. and Coffin Butte Landfill.

None of the businesses are in Marion or Polk counties.

The system would have little impact on Oregon’s overall economy, DEQ found, although some industries, such as those competing with businesses in other states, could suffer.

That could be addressed by freely giving allowances to those industries, Mason said.

Residents of rural areas with few transportation choices also could be more severely impacted by higher fuel costs. That could be mitigated by offering rebates.

Sale of the allowances could raise hundreds of millions of dollars in revenue for the state.

Oregon’s Constitution likely would require revenue associated with transportation fuels to be used for transportation infrastructure, DEQ said. The remainder would be unrestricted.

The committees did not take public testimony on Monday.

Previous attempts to put a price on carbon have been opposed by Associated Oregon Industries and some of its member businesses. They have argued that climate change is a global problem and Oregon’s emissions account for just a small fraction of those worldwide.

tloew@statesmanjournal.com, 503-399-6779 or follow at Twitter.com/Tracy_Loew

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