A controversial climate plan in Oregon draws lessons from California's mistakes: NPR

Oregon is becoming the second US state to adopt an economy-wide cap-and-trade system to regulate greenhouse gas emissions. But in California, while imitating the first program of its kind, Oregon also hopes to avoid repeating its mistakes.

Oregon's plan, like that of California, would limit greenhouse gas emissions that would be reduced over time. It would also create a market for companies that want to buy and trade a limited number of pollution permits. Ultimately, it aims to reduce emissions by 80% from 1990 levels by 2050.

But the bill to create the program is so controversial that the industry and some environmental justice advocates, who have broken ranks with environmentalists, are opposed to it.

While industry groups argue that cap and trade will increase energy costs and put their business at risk, opponents of the environmental justice group claim that there are too many loopholes supported by the company. The industry makes cap and trade inefficient.

Balancing risks and benefits

Oregon lawmakers have spent years debating how to design a cap-and-trade system balancing the risks of harming the economy and the benefits of reducing emissions.

"Science has told us that we have a very short time to really start making the transition with the way we have generated energy," said the Oregon Representative, Karin Power, co-author of the bill. "We can not literally go fast enough."

Power says rising fossil fuel prices under the cap-and-trade system will help steer the economy toward cleaner energy.

His bill would force the biggest polluters in the state to buy permits to cover their greenhouse gas emissions. It would invest the money generated by these permits in energy conservation and renewable energy, such as solar and wind energy, to generate more emissions reductions.

The program would cover about 80% of state-reported greenhouse gas emissions, including those from gasoline and diesel, natural gas and power plants.

In order to reduce economic damage, the bill provides free pollution permits, or allowances, to industries that are more likely to go bankrupt or leave the state because of the additional costs of a pollution control system. capping and exchange. Legislators have also created a rebate system to offset increases in the price of natural gas and added another bill that directs revenue to low-income households to help them cope with rising fuel prices.

"We have looked for ways to smooth the program for people on fixed incomes or low incomes in Oregon, while recognizing that we must do our part to reduce emissions," said Power.

Learn from California

Oregon has the advantage of learning from California's cap and trade program. But that's where things get complicated.

Severin Borenstein, an expert in the energy market at the University of California at Berkeley, said that prior to the 2008 recession, California had set an emissions cap too high, thinking that the growth of its economy would be faster than before.

This has created a problem because there are enough permits to pollute, so it is easy and inexpensive for companies to stay below the ceiling without actually reducing their emissions.

"I really think Oregon should do something different from what California has done," says Borenstein. "At present, if you ask what the cap and trade market is currently doing to reduce carbon emissions, I think the answer is not much."

According to Power lawmaker, the question of whether California sets a ceiling too high is the subject of debate even though it generally concedes that carbon prices are too low to stimulate price reductions. ; emissions. She hopes Oregon can avoid this problem.

Borenstein says that other cap-and-trade programs – in Europe and in the eastern states participating in the program known as the Regional Gas Initiative greenhouse gases – have also set emission ceilings high enough not to have much impact on emissions.

"The problem is that, whatever the threshold is, it's very difficult to predict what your economy's emissions will be under the status quo – in five or ten years," he says.

One of its key recommendations is to set minimum and maximum prices for pollution permits to prevent the program from having an insufficient – or excessive – impact on energy prices and emissions.

Power says the Oregon plan is doing this and is also using reports from previous years on greenhouse gases to develop "a more realistic and stable perspective on what emissions are and where they should be" .

Environmental justice groups disassociate

Khan Pham with Oregon's environmental justice group, OPAL, is part of a coalition of groups around the world who are denouncing the Oregon bill and the more carbon pricing systems. widely.

According to Mr. Pham, emissions from some oil refineries have increased under the California program because cap and trade allow for as long as a company pays for additional pollution permits.

"It really pays to pollute, and we have to stop polluters from polluting," Pham said. "This has had a disproportionate impact on low-income communities and communities of color."

One study found that 52% of California regulated companies had increased their annual greenhouse gas emissions and that many of them were close to disadvantaged communities.

Pham said other types of regulations, such as requirements for low-carbon transportation fuels and more renewable sources of electricity, work better than cap-and-trade. to reduce emissions in California. Oregon also has these additional requirements, and Pham says that she would like to see more direct regulations like these.

It also reports a new study that California could have counted up to 80 million tonnes of carbon dioxide through its forest carbon offset program, which was not the case.

As part of the cap and trade programs in Oregon and California, companies can purchase carbon credits to cover up to 8% of their emissions. Compensation can come from projects that manage forest lands to store more carbon by not cutting trees. But these carbon savings are difficult to validate and can be compromised by increased logging elsewhere.

"I think that cap and trade encourages accounting systems that can give the impression of reducing emissions," Pham said. "Our concern is that it prevents us from finding the real solutions because it gives people the impression that we are doing something to combat climate change."

Confident for better results

Shilpa Joshi with Renew Oregon OPAL is "an anomaly and an exception" in Oregon and dozens of other environmental groups, including those representing farm workers, Native American tribes, low-income Latin American communities and vulnerable populations, argue that categorically the Oregon cap-and-trade plan.

These groups worked to have the bill reduce pollution and invest in communities most affected by climate change, she said, and they agree that cap-and-trade – although it's not the only way to reduce pollution – is the only way to reduce pollution. they are not the only policy needed to fight climate change – are the best way. to achieve both emission reductions and the revenues needed to finance a cleaner economy.

"We must stop burning fossil fuels as quickly as possible," said Joshi. "It makes sense to go to the top of the food chain, regulate these polluters and use the funds to invest in clean energy throughout the state."

Oregon Governor Kate Brown said the state regulators planned to put in place stricter controls to avoid any miscalculation of carbon offsets and cuts. ; emissions.

"We are really working on creating a unique approach in Oregon that will prevent the system from playing," Brown said.

The Oregon bill is 10 times longer and much more detailed than what California enacted in 2006, and it reserves a few pollution permits as a cushion, so the state can change cap if necessary.

Brown says this could be the national model.

"Oregon is a small state," she says. "And if we can do it, it means that states like Minnesota, Connecticut and Kansas can do it, in a way that ensures the prosperity of their economy and reduces greenhouse gas emissions. "

That is, if Oregon's cap-and-trade plan works better than that of California.