Oregon has a plan to cap emissions from fuels

The Oregon Department of Environmental Quality has developed a new set of rules that would cap greenhouse gas emissions from fossil fuels and reduce them over time. Under the new rules, companies distributing more than a set amount of fossil fuels would have to reduce their emissions to meet a declining cap. To meet the target, they would be allowed to bank and trade emission credits that could come from switching to renewable fuels or electricity. They would also be able to pay for emission reductions in communities that are most vulnerable to climate change through an investment fund that could help cover the cost of switching to an electric vehicle or reducing home energy use. DEQ Director Richard Whitman joins us to explain the proposed Climate Protection Program.

The following transcript was created by a computer and edited by a volunteer.

Geoff Norcross: This is Think Out Loud on OPB. I’m Geoff Norcross in for Dave Miller. The state of Oregon is out with an ambitious proposal to bring down the level of emissions from fossil fuels. Under the so-called Climate Protection Program, industries around the state that pump those gases into the atmosphere will have to cap those emissions and the caps get lower every year. It adds up to an 80% reduction from current levels by the year 2050. Here to talk about the proposal is Richard Whitman, director of the Oregon Department of Environmental Quality. Mr. Whitman, welcome to Think Out Loud.

Richard Whitman: Thank you, Geoff. It’s a pleasure to be here with you.

Geoff Norcross: So let’s define our terms. What do you mean by fossil fuels?

Richard Whitman: We’re talking about fuels that are used as we drive around. So gasoline and diesel and also fuels that are used to heat our homes and power our industry, natural gas primarily, but also things like propane.

Geoff Norcross: Yeah, there are other emitters of greenhouse gases out there. I’m thinking about methane from cattle. Why are you limiting yourself just to these fuels?

Richard Whitman: These fuels represent collectively about 75-80%, depending on how you count, of the greenhouse-gas emissions in Oregon. So this is by far the bulk of the problem. There are some other pieces to the puzzle, and eventually we’ll have to decide whether we’re going to address those, but we’re addressing most of it through a set of programs that are being adopted or that have recently been adopted by the Oregon legislature.

Geoff Norcross: Okay, so here’s the plan. It’s to cap emissions from those covered industries at 28.2 million metric tons next year. That number will go down a little every year. And eventually you’ll have a cap of just six million metric tons in the year 2050. And that’s an 80% cut over the next 28 years. How did you arrive at those targets?

Richard Whitman: Well, the direction for this overall was given by Governor Brown in an executive order that she issued in 2020 and that kind of set the benchmark for us. I will say there’s still some question as to the exact target we’re shooting for and that will be decided by the Environmental Quality Commission, a citizen board that oversees this work when they meet in December.

Geoff Norcross: Okay. But they could change as the process goes. But these are not going to be suggestions for the industry. These are going to be hard targets. Can you talk about the consequences for industries that fail to meet them?

Richard Whitman: Yeah, the regulatory obligations will be on companies that supply natural gas, supply gasoline, supply diesel to Oregon. And if they don’t meet the required reductions, then they will be subject to civil penalties and potentially court actions to require them to supply less of those fuels in Oregon.

Geoff Norcross: And what might those punishments or restrictions, what might that be?

Richard Whitman: Well, it could be millions of dollars in civil penalties if they fail to meet those limits or an order from a court telling them to reduce the amount of fuel that they’re supplying.

Geoff Norcross: There’s some wiggle room in the targets and it involves the ability of the covered industries to pay into a fund. Can you explain how the Community Climate Investment Fund works?

Richard Whitman: Yeah, I can. There are a couple of mechanisms in this program as it’s being proposed to recognize that not everybody is going to reduce at the same rate. One of those is trading between the regulated companies. But a second mechanism is community climate investments, which you just mentioned, which is an ability to pay into a fund that in turn will be used to help homeowners and residents reduce their use of natural gas and to also potentially provide further incentives to use electric vehicles. So a lot of this program is about getting people off of fossil fuels, off of natural gas, off of our gasoline powered cars. And so some of that is going to take some incentives in that this aspect of the program would fund that.

Geoff Norcross: You also mentioned that industries can bank and trade credits to get themselves under the targets. How do they earn those credits?

Richard Whitman: Well, in terms of banking, they can earn them by reducing in early years faster than is required. And if they do that, if they go even faster than we’re requiring, they can bank some of that progress, early progress, and use it later. That’s one mechanism and then in terms of trading again, some folks are going to go faster than others and those who do go faster will be able to trade some of the credits that they earned by going faster to companies that are struggling, that are having a harder time going fast.

Geoff Norcross: You are kind of on track for a reduction anyway through the Oregon clean fuels law and that law required the phasing out of coal and it said a 30% reduction in emissions by 2050. Does this initiative really just ramp up what the state was doing anyway?

Richard Whitman: It’s a good point, Geoff. This program is really supported by a number of other programs that have been put in place by Oregon lawmakers over the years. One of those is the clean fuels program that is making the fuels that we use in our cars and trucks cleaner. That program has been a success. We’ve reduced the carbon coming from our transportation sector by 5% with almost no effect on price at the pump. But also the legislature this year passed the 100% clean electricity bill that gets us to 100% clean electricity by 2040 and that’s really an important underpinning of this whole effort because if we have clean electricity and we can shift how we get around to electric vehicles or other clean vehicles and how we heat our homes to electricity, that’s basically the pathway for how we do our part to reduce GHG emissions.

Geoff Norcross: There is a cost though. An analysis of the clean fuels program showed the reduction in carbon intensity it required resulted in a four cent per gallon increase in the cost of fuel. So aren’t fuel prices just going to go up more?

Richard Whitman: Well, I don’t know about you, but four cents per gallon when we’re currently paying close to 4 for regular, $4 per gallon for regular is about a 1% increase in fuel prices for a 5% decrease in carbon emissions. That’s a pretty good result, and I think reflects real success in the program and that along with cleaner vehicles and driving less is again how we get those GHG emissions reduced for our transportation sector.

Geoff Norcross: If you’re just tuning in, we’re talking about Oregon’s proposal for cutting climate pollution. Richard Whitman is the director of the Oregon Department of Environmental Quality. Richard, the Oregon Fuels Association says these rules are not just going to hit big industries. Small suppliers of fuel are going to have to comply and they can be family run businesses, mom and pop gas stations that operate on slim margins. Are you worried about them going out of business?

Richard Whitman: Well, I think there are going to be some economic effects of this program, but I have to say right now, we’re sending billions, many billions of dollars out of state every year to natural gas and petroleum companies that are producing and supplying that fuel into Oregon. There’s virtually no gasoline or diesel or natural gas that’s produced in Oregon. So all the money for all those fuels that we’re currently using goes out of state. If we can bring our energy production in part to the state, it’s going to provide an overall economic benefit for Oregonians. So yeah, I am worried about some of the little folks and we need to be conscious of having programs in place to help those small businesses transition to doing things like providing fast charging for electric vehicles. But overall this is going to provide a real economic benefit for Oregon.

Geoff Norcross: You mentioned electric vehicles a few times now and the Oregon Trucking Association says these targets will hit them hard because there’s really no viable E.V. option for them right now, E.V. semis with a range needed to move goods around are a long way away. So what do you say to that?

Richard Whitman: Well, I disagree that they’re that far out. I mean, we have Daimler here in Portland which is a global leader in developing electric vehicles for our freight industry. And in addition, there’s no expectation that we’re, long haul freight is going to be all electric vehicles anytime soon. We’re talking about a 30-year program and a gradual ramping to move to, in freight, not only electric vehicles, but also vehicles powered by renewable natural gas and something called green hydrogen, which is essentially hydrogen produced through using clean electricity. So there are lots of ways to get to clean trucks and electric trucks are one of them. And Oregon is a leader in that arena and I’m confident over a 30 year period that we can get there.

Geoff Norcross: You know, climate legislation has been a major sticking point in Oregon politics, especially recently, it’s led to walk outs by Republican lawmakers on more than one occasion. So how does that divisive political environment in Salem affect the formulation of this plan?

Richard Whitman: It has affected the formulation of the plan. We’ve had to rely on existing statutes that the legislature has passed, that give my agency and others authority to deal with some of these, some aspects of the climate problem, but not all of them. But I have to say the working legislature really stepped up in the last session and passed this House Bill 2021, the 100% clean electricity bill, which, together with other programs and authorities, gives Oregon the pathway to get to a clean energy future. So yeah, it’s been controversial in the past. I think there’s a growing realization in rural parts of the state that this program, this issue needs to be dealt with and that we can do it in a way that helps rural Oregon be protected from price increases in energy also. And that’s what we’re doing with these combination programs.

Geoff Norcross: Some would say this initiative doesn’t go far enough or fast enough. The Intergovernmental Panel on Climate Change says we need to cut greenhouse gas emissions by 50% over the next decade just to avoid the worst impacts of climate change. So in that light, why not adopt a more aggressive timeline?

Richard Whitman: Geoff, that is one of the things that’s going to be considered by the Environmental Quality Commission in December. We’ve heard a lot of testimony from the public that we should be going even faster than what’s been proposed so far and that will be one of the things that they have to grapple with. There is a trade off, the faster we go, the more risk there is of having some price increases in the short term. So we’re trying to be careful in terms of what’s been proposed so far to give Oregonians enough time to adjust to these changes so that we don’t see big price increases.

Geoff Norcross: Well, I just, I just, I’m having trouble grasping how price increases are not going to happen because emissions from these fuels primarily come from transportation in Oregon, 36% percent of those emissions come from cars and trucks and other forms of transportation in the year 2019 and that means the ways we get our goods around the state are going to be impacted the most. How are we not going to feel that as higher prices?

Richard Whitman: Well, it comes down to three things that we’re doing to reduce the amount of gasoline and diesel that we need, the demand side of the equation, if you will. One of those is incentives to, well, so: cleaner cars, cleaner fuels, and less driving, those three things. And on the cleaner cars front, Oregon is number two in the nation, this year so far in sales of electric vehicles and that number is ramping up really quickly, and that’s extremely encouraging, very important to this effort. On cleaner fuels, we’ve already talked about the clean fuels program that is one of the leading programs in the nation also, that we believe is going to get us to a 25% reduction, at least, in the carbon emissions from our fuels by 2035. And then in terms of not driving as much, Oregon again as a leader, because of largely, because of our land-use program, in creating communities where we don’t have to drive as much and where there are alternatives to driving. That doesn’t work for everywhere, but those three things together reduced demand for gasoline and diesel and that’s how we get there without increasing prices.

Geoff Norcross: You know, emissions from fossil fuels are a global problem. If California and Oregon and Washington put together a plan like you have put together, but Idaho and Wyoming and Nevada do not, what’s the effectiveness of the state by state or even a region by region initiative like this?

Richard Whitman: Well, I think obviously the Biden administration has a really high priority on reducing greenhouse gas emissions. Also, when we look forward to having some help from the federal level. But even without that, just to note on the clean electricity front, I mentioned the great legislation that was passed in Salem earlier this year. Hawaii, California, Washington, New Mexico, New York, Maine, Virginia all have similar programs. So this isn’t just about Oregon and California. These are states that make up a significant portion of the population of the US and states really are leading the way right now. We’d love to have the Federal administration help, but we’re making some good progress.

Geoff Norcross: You’re in the public comment part of this. Do you imagine your guidelines might change as you move closer to a final policy?

Richard Whitman: Yeah, Geoff. If people are interested, they should go to the web and look for Oregon Department of Environmental Quality. Our comment period for this program is open through October 25th at 4p.m. and this will all come to the Oregon Environmental Quality Commission for a decision on their part in mid-November of this year. There are other moving pieces of this and there’ll be more opportunities for public involvement over the course of the next year, But I really would encourage people who are interested to get comments in by the 25th.

Geoff Norcross: Richard Whitman, thank you so much for your time.

Richard Whitman: Thank you. Thanks, Geoff.

Geoff Norcross: Richard Whitman is the director of the Oregon Department of Environmental Quality.

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