Oregon’s big climate bill of 2021 generates little friction

Oregon would adopt one of the country’s most ambitious timelines for eliminating carbon dioxide emissions from its power grid under a major bill advocates believe will pass the Legislature this year.

House Bill 2021 — a product of intensive negotiations between the state’s largest utilities, environmental justice groups, renewable energy boosters and more — advanced out of one House committee last week. It must now navigate the state budgeting process before final votes in the House and Senate.

In a legislative session when police reform, COVID-19 assistance, racial equity and wildfire relief have been at the forefront, HB 2021 could be among the most impactful bills lawmakers will decide.

The bill sets a timetable by which Oregon’s two major power companies, Portland General Electric and Pacific Power, must eliminate emissions associated with the electricity they provide. Five “electricity service suppliers” in the state also would face regulation, though their emissions are tiny compared to the big utilities.

HB 2021′s central thrust isn’t groundbreaking by today’s standards. At least 17 other states and the District of Columbia have already adopted similar goals, according to the Clean Energy States Alliance.

But advocates say Oregon’s plan stands out in both approach and timeline. The bill requires PGE and Pacific Power to submit plans to reduce emissions by 80% from a baseline amount by 2030, 90% by 2035, and completely eliminate emissions by 2040.

That end date is notably ambitious. It’s a nearer deadline than nearly every other state that has adopted a clean power plan, including Washington and California.

Oregon would measure its progress in an atypical way, too. Most states have opted to ratchet down greenhouse gas emissions by requiring utilities to gradually increase the amount of power they get from renewable energy sources like wind and solar. Oregon, which has already had such a “renewable portfolio standard” since 2007 is taking a more straightforward approach: requiring PGE and Pacific Power to reduce their overall carbon emissions, which are tracked by the state’s Department of Environmental Quality.

“What we’re doing is harder, but I think it’s more honest,” said Bob Jenks, executive director of the Oregon Citizens’ Utility Board, which advocates on behalf of utility customers and supports the bill.

By targeting emissions, Jenks and others say, Oregon can focus on more than just ramping up its use of renewables. It can also place a premium on helping the state use power in a smarter, more efficient manner.

“It’s going to lead to a lot of renewable energy development; it’s going to lead to a lot of efficiency development,” said Jeff Bissonnette, a consultant with the Northwest Energy Coalition, which also backs the bill. “We’re really asking utilities to change the way they do business. That’s a big deal.”

Jumping together

Advocates of clean electricity have been talking about decarbonizing Oregon’s power grid for years.

In 2015, Stanford University researchers laid out a roadmap for what switching to 100% clean energy might look like in each state by 2050. A proposed ballot measure for 2020, ultimately abandoned, would have forced Oregon power providers to transfer to clean power by 2045. And President Joe Biden campaigned on a proposal to switch to 100% clean power as a nation by 2035, though that proposal’s chances of clearing Congress are unclear.

With HB 2021, Oregon appears to be on the verge of setting its own ambitious goal in stone.

The bill got its start last summer, months after Republicans cut the 2020 legislative session short with a walkout over Democrats’ sweeping proposal to reduce the state’s greenhouse gas emissions with a cap-and-trade system.

HB 2021′s origins, backers say, lie in a listening tour a coalition called the Oregon Just Transition Alliance held in cities around the state as it worked to develop an Oregon version of the “Green New Deal.”

“What we heard from communities is our energy policy is not serving our frontline communities and is not meeting our climate goals,” said state Rep. Khanh Pham, D-Portland, who at the time of the listening tour served as interim director of the OJTA.

Pham and the environmental justice groups that form the alliance emerged from the tour with ideas for how Oregon might decarbonize its energy grid, create jobs, and ensure that people disproportionately impacted by climate change were not left behind. Soon, OJTA members were talking with utilities, labor organizations, renewable energy developers, lawmakers and more.

What has emerged nearly a year later is a climate bill that supporters say has buy-in from an uncommonly broad coalition. Pham, who was sworn in to the Oregon House in January, is a chief sponsor of HB 2021, alongside Rep. Pam Marsh, D-Ashland, chair of the House Energy and Environment Committee.

Though the bill’s centerpiece is cleaning up Oregon’s power grid, it contains a lot more. HB 2021 also:

• bans expansion or new construction of power plants that burn natural gas or other fossil fuels
• sets strong labor standards for any large-scale renewable energy projects built in the state
• includes $50 million in grants for community renewable energy projects in cities other than Portland, which has its own fund for such projects
• allows cities in Oregon to create so-called “green tariffs,” where they agree to pay utilities more money for power from a cleaner mix of sources in order to meet their own climate goals
• requires power companies to consider input from low-income ratepayers, environmental justice communities, federally recognized tribes and others as they develop strategies for reducing emissions.

While all of those provisions — hashed out over months of sometimes-tense discussions — have given HB 2021 a solid support base, a big reason the bill seems to have a shot at passing this year lies in something else: a lack of organized opposition.

Unlike the ambitious cap-and-trade proposal that would have ratcheted down emissions throughout the economy, and developed many enemies as a result, HB 2021 touches far fewer entities. And many support the bill.

“We feel optimistic enough that we can get [to zero emissions] that we were willing to move forward to support this,” said Sunny Radcliffe, director of governmental affairs and energy policy at PGE, the state’s largest electric utility.

PGE already has a goal of reducing greenhouse gas emissions 80% by 2030, but to date has only set an “aspirational” target of eliminating emissions entirely by 2040. That’s because of a sticking point common to clean energy requirements: No one’s entirely sure how utilities will eliminate the final 10% or 20% of their emissions, the fossil fuel-generated power that can help ensure lights remain on when sun isn’t shining and wind isn’t blowing.

“There is a lack of clarity for how we as an industry are going to get the last bits out,” Radcliffe said. “I don’t know anybody in our industry who knows how to get to zero with the technology we have today.”

Boosters for clean energy targets point out that renewable energy has become far cheaper as technology improves, and they expect that trend to continue. As Radcliffe put it: “As an industry focuses on an outcome, [research and development] tend to follow.”

Pacific Power, the provider responsible for the largest single share of the state’s emissions from electricity use, also supports the bill, as do electricity service suppliers that sell power directly to large industrial and commercial customers in the state.

“I think the whole industry is kind of holding hands and jumping together here,” said Spencer Gray, executive director of the Northwest & Intermountain Power Providers Coalition, a trade group that represents the state’s five active electricity service suppliers.

Gray and others say HB 2021 takes a reasonable-yet-ambitious approach to decarbonizing, and offers power companies a range of options for reaching state goals. But they’re also relying on two caveats embedded in the bill as insurance.

One is a so-called “cost cap” that says utilities can be temporarily exempted from the regulations in instances where the rates for customers would rise more than 6% in a year, compared with other options. The other is the option for a “reliability pause” — that is, an exemption when the regulations could hamper a utility’s ability to provide reliable power.

The utilities view these provisions as necessary assurance customers won’t be overburdened by rising rates or left in the dark. Environmental justice advocates and others pushing the bill, say they’re logical concessions that likely won’t be necessary. Similar safeguards built into the state’s 14-year-old renewable portfolio standard have never been invoked.

“We are all acutely aware that that’s such an important piece to have in all of this: you have to keep the lights on for everybody,” said Damon Motz-Storey, who tackles climate issues for the group Oregon Physicians for Social Responsibility, and helped negotiate HB 2021. “If that means increasing your emissions for a little bit, then fine. But you have to submit a plan for getting back on track.”

Clear path to passage?

The lack of outspoken opposition to HB 2021 comes with a tradeoff: Even if successful, the proposal only addresses a segment of the state’s carbon dioxide output.

According to the DEQ, emissions from electricity accounted for 30% of the state’s greenhouse gas emissions in 2019. The entities regulated under HB 2021 are responsible for the vast majority of that, but some providers are left untouched.

Several dozen small consumer-owned utilities around the state are not impacted by the bill. Nor is Idaho Power, the state’s smallest investor-owned utility, which was removed from HB 2021 after pressing for an exemption and touting its own decarbonization goals.

The state’s largest source of carbon dioxide emissions, according to DEQ, are cars, trucks and other forms of transportation, which were responsible for 36% of emissions in 2019. They would not be regulated under the bill, though Gov. Kate Brown last year took executive action aimed in part at curbing transportation pollution. Lawmakers this year have also passed a bill requiring PGE and Pacific Power to invest an estimated $8 million to $10 million a year in helping Oregon drivers switch to electric vehicles.

While HB 2021 hasn’t spurred the big political rallies that Democrats’ cap-and-trade proposal drew in 2019 and 2020, the bill does have opponents. Nearly every Republican lawmaker who’s had a chance to vote on the bill this year has found reasons to vote “no.”

Perhaps the most outspoken opponent to date is state Rep. David Brock Smith, R-Port Orford, who’s been a mainstay in the Legislature’s discussions over reducing emissions in recent years.

Smith’s objections to the bill are legion. He believes HB 2021′s development was rushed, lacked transparency, and left out the input of critics like him who might have made it better.

He also favors a separate strategy for ramping up clean energy by increasing the amount of electricity utilities are required to source from renewable projects over time, an approach that resembles the strategy other states have adopted. Smith insists that by using this approach, and ensuring a certain percentage of renewable energy is sourced from Oregon, the state would see a rush of jobs in rural districts like his.

“I believe there are no green energy jobs associated with this legislation,” he told OPB.

A bill that would have instituted a strategy Smith agrees with, House Bill 3180, was ultimately scrapped in favor of HB 2021.

“It’s a travesty that we could have had a transparent process on bipartisan and bicameral legislation,” he said. Instead “we have a bill that will be a party-line bill. I hope it dies under its own weight.”

Proponents of HB 2021 argue it will lead to plenty of investment in the state even without explicit requirements — including, potentially, new offshore wind energy projects in Smith’s district. But the bill’s final major hurdle may be the money it guarantees for new projects.

Because it includes $50 million for cities to create their own renewable energy projects, HB 2021 is currently sitting in the Legislature’s Ways and Means Committee, which is already running behind in its central duty of passing out agency budgets this year. Senate Republicans’ ongoing insistence that bills be read in full before passage could slow the bill’s path to passage even more.

“Everybody’s eyes are on the clock,” said Radcliffe, the PGE lobbyist.

Still, HB 2021 has a lot working in its favor, including a jaw-dropping recent revenue forecast that should ensure the $50 million it requires is readily available, and enthusiastic support from House Speaker Tina Kotek, D-Portland, whose office says the bill ranks among her top priorities this session.

Everyone OPB interviewed for this story suggested the bill is likely to pass this year, marking a significant milestone in Oregon’s energy policy — even if it’s one other states got to first.

“Our energy systems are going to have to evolve with climate change,” said Jenks, of the Oregon Citizens’ Utility Board. “Scientists are telling us we must do that as a society. So the question is: How do we do it?”