A complex Cap-and-Trade legislative proposal will be considered during the 2018 Short Session of the Oregon Legislature, set to begin February 5, 2018. The legislation was drafted after work in the 2017-2018 Interim led by Senator Michael Dembrow (D-Portland) and Representative Ken Helm (D-Beaverton), chairs of their respective environment committees. Several issues surrounding the proposals have arisen on the proposed regulatory system along with new and dramatically high costs to homeowners and businesses with negligible benefits.
The Salem Area Chamber of Commerce and its member businesses recognize the importance of reducing greenhouse gas emissions and being good stewards of the environment. However, there are several issues of concern to Oregon’s business community that stood out when this matter was up for consideration before the Salem Chamber Board of Directors:
- The proposed legislation imposes additional costs and would impact all Oregon consumers. As contemplated in the proposed legislation, a cap and trade system would impose $700 million in additional taxes per year on manufacturers and energy producers. These additional taxes would cost the average family between $700-$1,000 per year in direct additional energy costs, yielding little economic or environmental benefit.
- On top of this additional cost, there is no guarantee the proposed program would reduce emissions.
- Proposals, limitations and deadlines are set in the bill without a clear, realistic way to attain those proposed standards.
- A complicated bill with far-reaching implications cannot be adequately analyzed and considered in the confines of a 35-day Session. This issue deserves a thorough vetting in a regular legislative session, such as the 2019 Legislative Session, where a reasonable compliance pathway and cost impacts can be considered and public input adequately allowed.
- Specifics on implementation of the proposal along with a reduction in greenhouse gas emissions need to be in the bill. Those details are left to agency rulemaking creating uncertainty for those subject to compliance.
The Salem Area Chamber of Commerce does not support the proposed legislation as currently drafted and introduced.
The questions and concerns noted here must be addressed before this legislation proceeds in the 2018 Session. Because of the impacts to Oregon businesses, careful consideration to key issues of the business community should be examined by the Legislature. Click here for the legislative agenda of the Oregon State Chamber of Commerce.
What can business owners do?
The 35-day Short Session starts on February 5. With a progressive legislature, it is imperative for the business community to work together to ensure this legislation does not pass. Offer support to Senator Peter Courtney, Senator Rod Monroe (Portland), and Senator Betsy Johnson (St. Helens), all Democrats, who have greater chance of partnering with the business community to defeat this legislation for now.
What does “Cap-and-Trade” mean?
“Cap and trade” is a system set by the state that would set a cap on the total greenhouse gas emissions businesses are able to make and companies in the largest industries would be required to buy pollution permits to cover emissions costs, which can then be traded. Prices for the allowances are established by a third party and then traded in a marketplace established for that purpose.
The proposed 2018 legislation would set a cap on total greenhouse emissions for Oregon. It would be initially applied to the 100 largest emitting companies, which would purchase allowances (or credits) to cover the amount of those emissions. Over an arbitrary amount of time, the cap on emissions will decrease and fewer pollution allowances will be available. Companies will be required to reduce emissions and buy credits to offset their emissions.
The Cap-and-Trade system proposed in the 2018 legislature would tie-in with a marketplace trading system that includes California and two Canadian provinces for buying and selling (trading) these emission-related allowances. The Oregon marketplace would be linked with existing markets in California and Canadian provinces, so a company in Oregon could buy pollution credits from a business in California to offset costs. Money from the sale of these allowances would flow back to the state and be allocated under a complicated system.
Regulatory details not defined in bill
Details and regulations on the proposed Cap-and-Trade system would be left to the Environmental Quality Commission (EQC) and Oregon Department of Environmental Quality (DEQ) to develop and implement. A recent audit by the Secretary of State’s Office showed the DEQ is already struggling to execute its current workload. It is important to provide specific direction in the proposed legislation to DEQ and EQC in order that the complicated nature of this new proposal can be properly implemented at a reasonable level of compliance for business and industry. Those important details are not in the proposed legislation
Oregon: one of the lowest levels of greenhouse gas emissions; high dollars spent on energy efficiency
Oregon’s share of worldwide emissions has one of the lowest rates. Furthermore, that share of emissions is shrinking as Oregon businesses comply with existing regulations and proactively invest in innovations to reduce emissions. Oregon has seen a 12-15 percent reduction in recent years, even with a growing population.
Huge improvements and investments in energy efficiency have been made in recent years by homeowners and businesses. As Oregonians reduce greenhouse gas emissions, there have been large investments in energy efficiency measures, driving down the amount of energy consumed in this state. There is room for improvement in energy efficiency rates by upgrading inefficient homes, specifically, homes of low-income households and buildings. Entities such as Energy Trust of Oregon exist to facilitate these measures. The proposed legislation does not take into consideration energy efficiency measures that have been making a difference.
Oregonians have much to be proud of in our environmental responsibility.