New Clean Energy Jobs Bills Seek to Regulate Greenhouse Gas Emissions in Oregon

by Tonkon Torp LLP

Tonkon Torp LLP

The Oregon legislature is currently in the process of figuring out how the state will (or won't) deal with the greenhouse gas emissions made by Oregonians that are negatively impacting the world's climate. Substantially similar drafts of the Clean Energy Jobs Bill (SB 1070) were released on January 8 in both the Senate (Legislative Concept 44) and the House (Legislative Concept 176). Besides a reduction in greenhouse gas emissions, the bill's goal is to "promote carbon sequestration and adaptation and resilience by this state's natural and working lands, communities and economy in the face of climate change and ocean acidification." The basic framework of the bill consists of a cap on greenhouse gas emissions and a market-based mechanism for covered entities to show compliance with the program.  

As to the cap, this bill would require the Oregon Environmental Quality Commission ("Commission") to adopt rules that set statewide greenhouse gas emissions goals by 2025 and actual limits by 2035 (greenhouse gas emissions must be reduced to levels that are at least 45 percent below 1990) and again in 2050 (greenhouse gas emission levels must be reduced to at least 80 percent below 1990 levels) – wow, that's a really long way off! Presumably this slow tightening of the belt will provide businesses adequate time to make the investments and changes needed to meet the increasingly stringent requirements.

As to the market-based mechanism, the bill gives the Commission and the Oregon Department of Environmental Quality ("DEQ") discretion to decide the details within the confines of the bill's requirements for allocation of allowances, standards for offset projects and for covered entities to use offset credits, auctions of allowances, trading of compliance documents, and processes for opt-in entities and general market participants to participate in the market-based compliance mechanism.

The goals and limits on greenhouse gas emissions apply only to "covered entities," which are generally entities that annually emit more than 25,000 metric tons of carbon dioxide equivalent, including those holding air discharge permits; certain electric companies and consumer-owned utilities; and certain businesses engaged in the import, sale, or distribution of fuel that emits greenhouse gases when combusted.

As is true with generally all regulatory programs, there are fees to be paid, including an annual program development fee and a registration fee. Proceeds from the program are to be invested in clean energy projects and programs in Oregon.

Unsurprisingly, the bill has generated a lot of opposing opinions and rallying cries from all sides of the political spectrum. But the concept of regulating greenhouse gases and putting a price on carbon is not new in Oregon and dates back to at least 1997. Countries all over the world have been wrestling with the problems of and potential solutions to the global impacts of our modes of transportation and of our construction and building industries. While there are surely many details to be worked out, equities to be balanced, and some time needed for trial-and-error, I hope that this bill ultimately paves the way for innovative technologies and new business models. I mean, who doesn't want to hurtle through space in a narrow tube?! However, based on a meeting organized by The Associated Press on January 29, Oregon senators stated that this bill is unlikely to pass in the 2018 Oregon legislature. So, keep dreaming…

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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