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Oregon's cap-and-trade bill explained

Oregon’s cap-and-trade bill didn’t survive the 2019 legislative session, but the broader issue of climate change isn’t going away.

Gov. Kate Brown told reporters Monday she would not back down on the issue, even if that means using her administrative powers to move ahead if a compromise bill cannot be passed.

State Sen. Michael Dembrow, co-chair of the Oregon Legislature’s Joint Carbon Reduction Committee and one of the primary advocates of House Bill 2020, said he plans to work with his House counterpart on the committee to develop a plan for the future.

“Under HB 2020, the program was slated to begin in 2021,” Dembrow said. “This is a setback, obviously, but if we can get this in place in February or before, then there is still hope for us to get this program underway in 2021.”

Dembrow said he is open to working with the 11 senators who walked off the job last month to avoid voting on the bill, but he’s not willing to water down the effectiveness of the cap-and-trade policy in the name of further compromise.

The motivation for the bill is to reduce the amount of carbon emitted into the atmosphere over time, said Philip Mote, a researcher involved with the Oregon Climate Change Research Institute and the vice provost and dean of the Oregon State University Graduate School.

What is cap and trade?

HB 2020 would have restricted the amount of carbon large-scale industrial emitters could produce (the “cap” component) to 25,000 metric tons of carbon dioxide equivalent. Businesses that emit amounts under the cap would be able to sell carbon credits to those who emit more (the “trade” component), Mote said. Over time, the credits available would decline, forcing producers across the state to reduce their emissions by 80% by 2050.

The system would spur firms to modernize their methods and develop cleaner processes, said professor Ric Holt, who teaches economics at Southern Oregon University.

The revenue generated from auctioning off carbon credits would be returned to Oregonians through investments, such as through green energy projects and transportation infrastructure improvements.

“We’re choosing a way of reducing emissions that puts a price on producing emissions,” Dembrow said. “With the revenues from those, we can make investments in those areas that are already feeling the effects of climate change.”

If the idea is enacted, Oregon would join California as part of the Western Climate Initiative, linking the carbon market in Oregon with the much larger market in California.

Why was the bill so controversial?

Cap and trade, as well as climate policy in general, has not always been as politicized or partisan as it is now, Dembrow said.

A similar kind of market system was used to reduce the release of sulfur dioxide and nitrous oxide, which react in the atmosphere to create acid rain, Holt said.

Opponents of the bill — many of whom were Republicans representing rural areas — said the financial burden of the policy would have disproportionately impacted residents in their districts, who earn less than city-dwellers on average and are more likely to work in high-emission industries such as manufacturing or drive long distances, Mote said.

However, according to Mote, the reality is more complicated. He compared the potential impact of the legislation to the federal Clean Air Act, which reduced jobs in some sectors and created new jobs in others.

Another component that led to disagreement was a lack of clarity on what the bill would actually do, Dembrow said. For example, loggers gained attention for protesting the policy in Salem, but the industry would have been exempt from the restriction.

Some loggers expressed concerns that they would have had to give up older vehicles, but that was part of an unrelated bill — which also exempted logging trucks, Dembrow said.

“They’re good people, I talked to a lot of them, but they were terribly misinformed,” Dembrow said.

Many industry groups and representatives are opposed to cap and trade because it is harder to predict than a fixed carbon tax, Mote said.

“A carbon tax ... provides stable and known prices so businesses can make investment decisions without fear of unknown and fluctuating regulatory prices that can be manipulated by private firms, government agencies or third parties,” Holt said in an email. “Also, the carbon tax is easier to implement since it relies on existing programs that tax fuels while putting into place a cap-and-trade program is more complicated.”

Beyond cap and trade or a carbon tax, a third approach is regulation, such as directing agencies to reduce their emissions, which occurred under the Bush and Obama administrations. There is a desire among some states to take the initiative on this, as the Trump administration has rolled back many Obama-era rules, Mote said.

“Many climate scientists fall into the category that I do of ‘whatever works,’” Mote said.

But in an increasingly polarized environment, getting any of these options passed will continue to be an uphill battle for Democrats and environmental advocates.

The costs of inaction

The fact that Oregonians and people around the world are already experiencing the effects of climate change can be overlooked in the conversation around these kinds of policies, Mote said.

Here in Southern Oregon, people have had to grow accustomed to hotter, drier summers, more destructive fire seasons and smoke.

“If we let climate change continue unabated, there will be enormous costs — from fires to coastal damage and floods,” Mote said. “We have to add that to the ledger.’”

While he noted that Oregon or a few states acting on their own would not make a major difference in global temperatures, Mote said it’s important to make an effort to reduce carbon emissions.

“We know from history the mere fact of taking a step can influence others to do the same,” Mote said, recalling that Oregon was one of the first states to recognize the dangers posed by chlorofluorocarbons to the ozone layer, which led to a broader push across the country.

The longer the effort to curb carbon emissions gets put off, Dembrow cautioned, the more expensive and difficult it will be to make a significant impact.

During the public hearings and work groups held to craft HB 2020, Dembrow said, rural citizens had the opportunity to express their concerns about the bill, many of which were related to potential cost increases or job losses associated with moving away from nonrenewable energy.

“We also heard just as much if not more fear about the effects of climate change,” Dembrow said. “All of those fears are logical and legitimate, and we have to show that there is a role for government in helping to solve these problems.”

Contact Mail Tribune reporting intern Joe Wolf at jwolf@rosebudmedia.com or 541-776-4368. Follow him on Twitter @JoeCharlesWolf.

In this June 12, 2019, file photo, a truck moves around the Oregon state Capitol during a protest against climate bills that truckers said would put them out of business. (AP Photo/Sarah Zimmerman)