LC 894 – Cap & Trade Legislation Released!

The long-awaited draft of the Cap & Trade proposal was released this week. The 98-page legislative concept (LC) 894 provides the first glimpse of specifics on the proposal since the 2018 Session. One important point to note is that as initially drafted the LC does not continue the longstanding tradition of splitting new State Highway Trust Fund revenue 50-30-20 percent between the state, counties and cities.

Please call your local legislators and let them know this must be included as the bill progresses forward.

Notwithstanding that point, here are some of the key program elements:

  • Statewide GHG Goals:
    • 2035 – 45 percent below 1990 emission levels
    • 2050 – 80 percent below 1990 emission levels
    • The cap on regulated entities will decline each year by a constant tonnage amount to achieve the 45 percent reduction
  • Sectors covered:
    • Greenhouse gases
    • Fossil Fuels – natural gas, gas, diesel and propane
    • Electricity
    • Industrial processes – landfills, manufacturing – cement, pulp and paper, iron and steel and certain chemicals
  • Exemptions:
    • Public universities and OHSU
    • Landfills closed before the effective date of bill
    • Consumer owned utility or entity importing electricity averaging less than 25,000 tons/year over past 3 years
    • Methane emissions from landfill captured and used to create renewable energy
    • GHG emissions from combustion of municipal solid waste to create renewable energy
    • GHG emissions from generation of electricity – delivered to another state
    • GHG emissions from aviation, watercraft or locomotives
    • Temporary exemption for fluorinated gases generated from semiconductor manufacturing through 1/1/2026 (Intel)
  • Allowances (direct allocation)
    • IOUs – 100 percent of allowances through 2030; decline annually 2031-2050
    • Public Power – 2021 100 percent of allowances; 2022-2025 declines annually
    • Natural Gas  – allowances needed to cover low-income residential customers
    • Emissions Intensive, Trade Exposed (EITE) – 100 percent of allowances required in 2021 then decline annually
  • Market Design
    • Will include minimum price for allowances and maximum (floor and ceiling)
    • Entities allowed to bank for future compliance
    • Compliance on a 3-year cycle
  • Oregon Off-sets
    • State will develop offset protocols for natural and working lands
    • Advisory Committee: ODA, Board of Forestry Environmental Justice Task Force and OR Watershed Enhancement Board

Click here to view the draft bill.

The Governor shared the below statement in support of the proposal:

“Climate change threatens our communities, our economy, and our way of life in Oregon,” said Governor Kate Brown. “This is why I support a comprehensive market-based program to reduce our emissions and transition to a clean energy economy. It is encouraging to have reached this important milestone with a bill that reflects significant work on the part of legislators, advocates, and businesses across Oregon. I look forward to further refinements through the legislative process to ensure the program achieves our climate goals while growing our economy.”

Tentative Timeline —

  • February 4th – No Hearing
  • February 8th – The BEAR economic report is expected to be released and the Committee will hear invited testimony in response to LC 894
  • February 11th – Additional invited testimony
  • February 15th – Public Hearing

Contributed by: Mike Eliason | Interim Executive Director, Legislative Director