At the request of lawmakers, the Oregon Department of Environmental Quality has completed an extensive report on considerations for a cap and trade program to limit carbon emissions and promote investment in alternative energy sources.
And, while the study determines the statewide economic impact of such a program would likely be minimal, it does raise concerns about effects on rural communities and specific industries, including food processors.
Legislation to cap greenhouse gas emissions is once again on the docket of the Oregon Legislature, after a similar bill was introduced during last year’s short session. Senate Bill 5701 directed DEQ to conduct its study, which was released by the agency Tuesday.
The findings suggest a carbon market could offer a flexible, cost-effective mechanism for lowering greenhouse gas emissions, though low-income and rural communities may be disproportionately affected.
Because cap and trade increases the cost of fossil fuels, it may place a greater burden on low-income households, which generally spend a higher proportion of their income on energy and are less able to afford things like energy-efficient vehicles and appliances.
Eastern Oregon also relies more heavily on vehicle travel and large machinery using fossil fuels, the study notes. To offset these impacts, the study recommends using revenue generated by cap and trade to reinvest in worker training, energy efficiency projects or energy bill rebates for vulnerable.
Cap and trade works by setting firm limits on carbon emissions that gradually decrease over time, with emission allowances that can be bought and sold over an open market. Environmental advocates hailed the proposal of cap and trade in Oregon during a teleconference Friday, which they say will accelerate green energy development with limited economic consequences.
But Maggie Tallmadge, environmental justice manager at the Coalition of Communities of Color, said climate change is already costing rural Oregonians, be they farm laborers sweating through increasingly hot summers or tribal members struggling with less access to traditional foods.
“We need to see reinvestment in communities that are impacted by climate change, and the pollution that comes with it,” Tallmadge said.
Industries, namely food processors, may also face pressure in a cap and trade scenario, according to the DEQ report. Companies might not be able to pass the cost of purchasing emission allowances on the market down to consumers, the study acknowledges, which may force them to close or move out of state.
Paul Cicio, president of the Industrial Energy Consumers of America, advised that any greenhouse gas policy must have a level playing field for businesses. In comments submitted to DEQ, he urged Oregon to exempt energy-intensive, trade-exposed companies to be exempt from any cap and trade policy.
“Cap and trade regimes placed upon (our) industries will directly and negatively impact our ability to compete with imported products from foreign countries and non-regulated states that do not have the same costs of compliance and regulatory uncertainty,” Cicio wrote.
In its study, DEQ states it could provide free emission allowances to certain businesses in order to defray additional costs, while still creating an incentive to reduce emissions.
The Senate Committee on Environment and Natural Resources will hold a hearing Monday in Salem, where lawmakers will hear from two DEQ officials about the study. There is one bill on the Legislature’s docket, proposed by Sen. Lee Beyer (D-Springfield) that would revise Oregon’s current greenhouse gas emission goals and require DEQ to adopt a statewide carbon cap and investment program.
Contact George Plaven at firstname.lastname@example.org or 541-9663-0825.