Ore. to consider cap-and-trade systems

Source: Elizabeth Harball, E&E reporter • Posted: Wednesday, May 18, 2016

Oregon is kicking off a $230,000 study on how the state could use market-based tools to reduce its greenhouse gas emissions at the behest of lawmakers seeking aggressive action on climate change.

The Oregon Department of Environmental Quality yesterday announced it was beginning the report at the request of the state Legislature, which this year allocated funds to the agency for this purpose.

The Legislature this year considered, but did not pass, a bill that would have required the state to adopt a carbon market.

Instead, lawmakers required DEQ to perform a broad study on the idea. The state environment agency must report its findings to lawmakers in February.

According to DEQ senior climate change policy adviser Colin McConnaha, the study will look at the pros and cons of various market-based mechanisms to reduce greenhouse gas output. That includes economywide cap-and-trade systems like California’s and a system limited by sector like the Regional Greenhouse Gas Initiative, a multistate carbon-trading system in the Northeast that only applies to power plants.

If Oregon decides to move forward with this strategy, it’s possible that it might merge its carbon market with established markets in other states.

“Linking is clearly going to be a big part of the discussion,” McConnaha said.

Eyeing the Calif. model

Oregon is pursuing a number of aggressive measures to address climate change, and McConnaha said the study will need to assess how a market-based mechanism could work with the state’s current policies. For example, Oregon enacted a law in March requiring the state to get 50 percent of its energy from renewable sources by 2040 and eliminate its use of coal-fired electricity, including electricity imported from other states, by 2030 (ClimateWire, March 3).

Additionally, “we will want to take a look at how this would work in relation to the requirements of the Clean Power Plan,” McConnaha said.

Oregon is among the states that are continuing to look at how to comply with U.S. EPA’s rule to curb carbon emissions from the power sector following the Supreme Court’s decision to stay the regulation.

But, McConnaha said, “our Clean Power Plan work and engagement with stakeholders has certainly slowed down following the stay,” adding, “The stay does free up some space and time to work on this study.”

At DEQ’s previous meetings on the Clean Power Plan, the state discussed the possibility of using different carbon-trading mechanisms to comply with the rule, which would require the state to reduce its emissions rate 20 percent from 2012 levels by 2030.

However, this would only apply to the power sector, and because the state’s only coal-fired power plant is slated to close in 2020, environmental groups felt it would be fairly easy for Oregon to comply with EPA’s climate rule.

Noah Long, director of the Natural Resources Defense Council’s Western Energy Project, said he thinks an economywide trading program could be an effective way for Oregon to tamp down on greenhouse gases produced outside its power sector. Transportation is Oregon’s top source of emissions, Long noted, so an economywide carbon cap could be a way for the state to address emissions from that sector.

“I think keeping an overall economywide cap on the table is really important,” said Long, adding that he believes California’s system “overall provides a pretty good model.”

The first meeting on the study will be held June 10 at DEQ’s headquarters in Portland.