Clean Energy Jobs Bill (HB 2020) in Perspective

What does a comprehensive Climate Action Plan look like for Oregon? Several groups are working on this question, but one aspect of all the plans is their need for specific interlinking measures. The Clean Energy Jobs (CEJ) Bill has always been seen as a centerpiece for lots of other climate related policy. The figure below is a logical expansion of the Renew Oregon puzzle diagram from 2016. The boxes identify specific legislative, regulatory and programmatic measures that need to be implemented to secure a reasonably stable climate.

Some people want stronger action than CEJ delivers, and I fully agree with that sense of urgency, but I have been fighting this battle for 30 years, first to commercialize solar energy in the 1980s, developing small-scale renewable energy projects in developing countries and rural communities, and modeling national energy systems to advise government policy in transitioning to a clean and low-emission economic system. I have been preaching urgency for the last 20 years, to the sometime annoyance of my wife, and I rejoice at the added voices for urgent change. We still need many more, and we’ll get them if we keep a common vision.

I love the Green New Deal (GND) and I welcome its rallying cry for bold quick and equitable action. To achieve the GND we will need to open up multiple fronts of action. The figure below describes one subset of legislative regulatory and programmatic measures which constitute a comprehensive set of GHG reduction requirements, clean energy and decarbonization investments and significant social equity provisions. HB 2020 can be a strong centerpiece, as described in the green boxes, and complimented by specific near-term and longer-term actions.

Key Features of Clean Energy Jobs

• The Cap is the Stick. It creates a leg requirement to reduce GHG emissions from covered entities, which must turn in one allowance for every ton of GHG emissions they produce. As annual allowances decline so do emissions.

• A definite Cap requires reductions even if allowances are free

  • The Market is the Carrot. It allows businesses to invest in emission reduction activities according to their individual capacity and timing, and raises revenue from the sale of allowances the state places for auction each year.

Investment Fund Revenue

How much revenue will this bill raise has been the subject of much debate, and I offer my own calculation, which I welcome all to analyze and critique. The calculation is based on the emission shares from the 2017 GHG inventory of covered industries published by the Oregon Carbon Policy Office, adjusted for growth to 2021. It assumes the exemptions, reserve accounts, offsets and allocations of free allowances in the current bill. Other assumptions include the share of free allowances that utilities might sell rather than use for compliance. Proceeds from such sales must be spent to benefit low-income ratepayers.

The level of revenue raised ($575 million) is significant, with $ 90.4 million going to Utility Ratepayer Benefit Programs, $156.7 million going to the Climate Investment Fund and the Just transition Fund, and $328.4 million going to the Transportation Decarbonization Investments Account. And this is before proposed improvements to the bill.

Highlights and Needed Improvements to the Bill

1. Greenhouse Gas Emissions Reduction Goals: The bill calls for 45% reduction from 1990 levels by 2035 and 80% reduction from 1990 levels by 2050. The latest climate science argues for even tougher targets: 20% by 2025, at least 55% by 2035 and 100% by 2050.

2. Allowances: Free allowances provided to electric utilities (currently 100%) should be reduced to only account for their RPS and Coal-to-Clean committed reductions. Free allowances for gas utilities are assigned in proportion to their low-income customer base to help mitigate increased fuel costs for those customers. All funds realized by utilities from sale of free allowances must be used to support low income customers through weatherization, solarization and bill rebates.

Energy intensive, trade exposed industries (EITEs) that are at risk of leakage are awarded free allowances, but the current benchmark of the sector-average emission factor is not ambitious enough and should be at most 90% of the average (as in California). EITE status should be needs-based only, regularly re-evaluated, and phased out altogether by 2030. The current level of free allowances (by our calculations) is 37%, and we recommend that free allowances be no more than 25% of total allowances.

3. Offsets: The bill allows any covered entity to use offsets to comply with up to 8% of their emissions. At least half of those offsets must provide environmental benefits for Oregon, and no covered entity can use offset if located near in a communities which suffer from poor air quality standards. The bill establishes an advisory board to monitor the program and ensure that offsets are real, permanent, quantifiable, verifiable and enforceable. In order to maximize fossil fuel emission reductions, we should limit offsets to the 4% and require all to have Oregon benefits.

4. Exemptions and Exclusions: All major polluters of greenhouse gases need to be subject to the cap, including semi-conductor GHG pollutants, and aircraft and marine fuels.

5. New Fossil Fuel Infrastructure: The bill clearly states that new fossil fuel infrastructure projects cannot be granted exemptions or EITE status. In addition, we should push for a companion bill to place a moratorium on all new fossil fuel infrastructure projects.

6. Investment Fund Requirements: The bill is very specific about how the moneys raised by the program should be invested.

a. Any revenue gained by utilities from selling unused allowance must go to strengthen exiting utility-based weatherization, solarization and low-income-rebate programs

b. Proceeds from vehicle fuel suppliers go to the Transportation Decarbonization Account (a subaccount of the Highway Trust Fund) that must be dedicated to projects that reduce GHG emissions and benefit impacted communities.

c. The majority of proceeds from Industry and other fuel suppliers go to the Climate Investment Fund that will focus on energy efficiency and energy conservation projects, transportation electrification, investments in natural and working lands to support GHG sequestration, development of clean energy infrastructure, and projects to increase the resilience of fish and wildlife ecosystems.

d. The rest of the proceeds from Industry and other fuel suppliers go to the Just Transition Fund to support economic diversification, job creation, job training and provide support and re-training for workers who need to transition into the clean energy economy.

e. However, the bill needs to enumerate specific allocations of the Climate Investment Fund (e.g. 50% to impacted communities, 10% to tribes, 20% to natural and working lands, and 20% statewide) and the Just Transition Fund.

7. Public Utility Commission (PUC): The bill specifies that the PUC is required to ensure utilities use proceeds from sale of allowances to reduce GHG emissions and provide bill assistance, weatherization, energy efficiency, transportation electrification and grid modernization. I believe the PUC should adopt, as a core part of its mission, supporting Oregon’s transition to a clean energy economy.

8. Carbon Policy Office: This office, established by the bill, is expected to be combined into a new Oregon Climate Authority that will integrate those departments from DOE and DEQ needed coordinate actions and ensure the GHG reduction goals are met. This new authority must have the necessary regulatory authority to ensure compliance with requirements set out in the bill. Stay tuned as more is learned about this new authority.

9. Governance: The bill establishes a nine-member citizen advisory committee that has geographic and socioeconomic diversity. The bill needs to strengthen the requirements for racial diversity and representation by tribes. The bill requires that five-year reviews are conducted and reported to ensure accountability to the goals.

Immediate and Near-term Climate Legislation Priorities

Several complementary initiatives need immediate or near-term actions. The top of this list should be a moratorium on new fossil fuel infrastructure, which we should push for in this session! The Governor may find it inconvenient and will need to provide motivation to do the right thing and take the heat (and the glory.)

Comprehensive legislation is needed to address Agriculture and Forestry practices and emissions, and work on such legislation should be prepared for introduction in the 2020 legislative session.

Another priority should also be a 2019 bill to address dirty diesel trucks by establishing new diesel emissions standards in line with California and Washington. Aligning our truck emissions standards will improve their efficiency (which reduces GHG emissions) and reduce particulate air pollutants that are a significant health hazard in urban areas.

Other bills introduced this session need to be defeated, such as SB 444, which would exempt small modular reactors from certain siting restrictions that apply to nuclear-fueled thermal power plants.

Longer term initiatives

Longer term initiatives should include consideration of a constitutional Amendment to convert the Highway Trust Fund to a Public Transit Trust Fund to better develop public transport in both urban and rural communities. Legislation to increase the share of renewable generated electricity to 100%, and legislation to shift Clean Fuels subsidies from ethanol to biodiesel, based on the premise that as we transition automobiles from gasoline to electric, we will need more biodiesel for the truck fleet.

Dr. Pat DeLaquil

www.decisionwaregroup.com