Oregon Could Widen Carbon Trading across North America

Oregon regulators are studying how to design an economywide carbon cap-and-trade system that would be able to link with other similar programs in neighboring states and provinces.

While a bill to actually implement a cap-and-trade system eluded state lawmakers in the legislative session that ended in March, they did direct the state Department of Environmental Quality to study “a market-based approach to controlling greenhouse gas emissions.”

DEQ staff are beginning the study now and said Friday that they plan to start with the assumption that they would be linking markets with California, Quebec and other members of the Western Climate Initiative, the U.S.-Canadian subnational carbon-trading alliance.

“This cap-and-trade program needs to be one that would be compatible with the Western Climate Initiative platform,” DEQ climate change policy lead Colin McConnaha said in a meeting in Portland with interested parties. “We believe that’s the most obvious linkage.”

Oregon has greenhouse gas targets of 10 percent below 1990 levels by 2020 and at least 75 percent below 1990 levels by 2050, in accordance with a 2007 bill. The state’s emissions peaked in 1998 at 72 million metric tons. Emissions in 2014 were roughly 7 percent above 1990 levels, at 60 million tons.

The bill that died in committee earlier this year, S.B. 1574, would have authorized a cap-and-trade program, with its revenues going toward activities that reduce emissions, explicitly including road improvements.

The March budget bill included $230,000 for the state to conduct the study. Accompanying language instructed DEQ to identify the type of cap that would be needed to link with other jurisdictions.

DEQ will also be studying how a cap-and-trade program would interact with existing programs, including the state’s renewable portfolio standard, its clean fuels program and U.S. EPA’s Clean Power Plan for power plants, which is currently on hold pending court challenges. The Legislature also directed it to study how other jurisdictions’ programs control costs for businesses, as well as disadvantaged and rural communities.

McConnaha said the study would draw on existing research that has informed existing cap-and-trade programs, including California’s, the Regional Greenhouse Gas Initiative in the Northeast and the European Union’s Emissions Trading System.

“It’s going to be heavily reliant on data and research that’s already out there, which is not necessarily a bad thing,” he said. “We are certainly not going to be reinventing the wheel on this.”

DEQ’s study is to be finished in time to be presented to the Legislature when it reconvenes in February 2017. Comments on the study’s potential scope and content are due June 24.

An environmental advocate said lawmakers might try again next year on authorizing a cap-and-trade program.

“The first choice of everybody would be to have the Legislature take this up,” said Noah Long. Gov. Kate Brown (D), who took office last year upon the resignation of former Gov. John Kitzhaber (D), is up for re-election in November, as are a number of state lawmakers. “The action taken by the Legislature will largely depend on who’s there,” Long said.