Climate Protection Program offers opportunity for Oregon’s economy

Oregonians from across the state are weighing in on a crucial program that officials say would address nearly half of Oregon’s solutions to the climate crisis, while positioning Oregon for leadership in the clean energy economy. 

The proposal would restore the Climate Protection Program, which sets a declining cap on emissions from natural gas and liquid fuels. A fossil fuel-funded lawsuit invalidated the program on a technicality last year, and the current public comment period marks a milestone in the Department of Environmental Quality’s work to get the plan back on track. In the process, DEQ has made improvements that strike an innovative balance – driving down emissions, advancing equity and addressing the key concerns of regulated industries.

Forward-looking Oregon businesses see many benefits in the program. It creates a long-term planning horizon while aligning industries to do our share in the climate fight.

The program would enable businesses to tell customers, employees and communities that they’re on track. And it would create clean economy jobs and business opportunities from manufacturers to installers – in a wide range of sectors.

Long-term, the program would drive savings and give a lift to Oregon’s whole economy.

Independent analysis found that the program, along with other recently adopted Oregon climate policies, would add nearly 10,000 jobs and $2.5 billion annually to Oregon’s economy as of 2050. We also know that transitioning customers, both businesses and households, to clean energy saves money over time and keeps those dollars circulating in our local economies.

For businesses covered by the program – gas utilities, oil companies and major industrial facilities – the program would provide free emissions  allowances or “credits” up to a set limit or “cap” which would decline each year until 2050. To help companies meet the cap, the program would provide several mechanisms. First, companies would begin to reduce their own emissions. Those that could do this quickly and cheaply could sell any extra credits they earn by reducing emissions at a rate faster than required by the Climate Protection Plan. Second, companies needing more time could buy these extra credits. Third, businesses also could bank any extra credits for use in later years. And fourth, covered businesses would be allowed to average their emissions over two-year periods. 

If all those tools weren’t enough, businesses could buy Community Climate Investment credits. These dollars would fund projects that reduce emissions through energy efficiency, transportation electrification, renewable energy and other approaches, prioritizing communities and households most impacted by climate change – and those that most need the investments, cost savings, resilience and health benefits of these solutions. 

The plan also addresses concerns of energy-intensive, trade-exposed  companies in Oregon by giving them an easier path to meet the plan’s  goals and more independence in controlling their emissions.  

Despite the clear opportunity for Oregon’s economy, entrenched utilities are clinging to their antiquated business models and continuing a history of delay tactics. Ignoring all the other options, they’re complaining about the price of the Community Climate Investment credits and assert overall costs would be high, which spreads confusion among their customers. The reality: While the Oregon credit price would be higher than in other states, our emissions reductions would be slower, meaning utilities would need to buy far fewer credits than if they were operating in Washington state, for example. This would more than offset the price difference, and would make the cost of Oregon’s program on par with or cheaper than programs in other states.  

While the program’s greenhouse gas limits would have firm enforcements – or sticks – the plan would offer carrots by working hand-in-hand with other state programs and federal grants that offer billions of dollars to help businesses reduce emissions. 

The Climate Protection Plan operated for two years before it was invalidated. In those first two years, Oregon gasoline and diesel providers found that they were doing very well under the plan – selling more biofuels and dropping greenhouse emissions much faster than required. 

In a surprising move following the legal attacks, DEQ plans to grant fuel providers the credits they would have earned if the program hadn’t been invalidated, providing them all at once as the program restarts.This windfall of credits would flood the market and delay emissions reductions as companies opt to buy up these credits. It also would delay investments and job creation through CCIs. If DEQ is intent on distributing these credits, they should dole them out over 10 years, avoiding the oversupply that dogged other carbon markets in their early years. 

Climate-savvy businesses have a chance to let DEQ know their thoughts on having an innovative, clear, long-term plan to ensure Oregon does our share to address climate change.