Oregon Lawmakers Float Changes As Cap-And-Trade Debate Begins In Earnest

Democrats hoping to push through a divisive climate change bill came bearing gifts Tuesday.

In a hearing that drew dozens of spectators from around the state, a Senate committee introduced new amendments to Senate Bill 1530, Oregon’s latest attempt to create a cap-and-trade system for greenhouse gas emissions.

Related: The 2020 Oregon Legislative Session: What You Need To Know

The changes are aimed at easing the bill's path through the Capitol as lawmakers begin their even-year sprint through a 35-day "short session." Specifically, the changes mark a response to a January hearing on the proposal and include provisions that cheered groups on both sides of the issue.

“We heard a lot of perspectives on the bill,” said Sen. Michael Dembrow, D-Portland, chair of the Senate Environment and Natural Resources Committee and a key author of the proposal. “We listened. We responded.”

But given the tenor of the cap-and-trade debate, the tweaks aren't likely to avoid serious conflict in the weeks ahead. Wary of cost increases they believe will prove unwieldy, Republican senators have repeatedly threatened to leave the Capitol if the bill is brought up for passage. They used a similar tactic last year, and succeeded in crippling Democrats' attempt to create a cap-and-trade system.

Like the 2019 proposal, SB 1530 would force big greenhouse gas emitters in the transportation, manufacturing and utility sectors to obtain credits for each ton of gas they emit, and set an overall cap for emissions allowed in the state. That cap would lower over time, in theory ensuring Oregon meets stringent conservation targets in 2035 and 2050. Entities required to obtain permits could trade them with one another.

The actual amendments that lawmakers put forward Tuesday were relatively small in scope — certainly less consequential than rollbacks from last year's bill that Democrats have already introduced.

The changes, for instance, would keep in place a three-tiered system for regulating automotive fuels in the state, but alter what those tiers look like.

Under the new proposal, fuels in the Portland metro region would be regulated when the program begins 2022, likely increasing the price of gasoline and diesel fuel there. Three years later, the state’s 19 westernmost counties would be folded in, with the Cascade Mountains acting as an approximate dividing line between regulated and unregulated regions. Bend and Klamath Falls would also be subject to the fuel regulation.

According to Dembrow, roughly 87.5% of the state’s fuel emissions would be regulated under this arrangement. The state’s remaining 17 counties would not be regulated unless at least 20 counties opted into the program — a development some officials view as unlikely in the near term.

This county-based regulatory structure differed from the previous proposal, which would have regulated Oregon cities in a more piecemeal fashion. The change was met with approval from the Oregon Fuels Association, which had lambasted the previous proposal.

Michael Freese, a lobbyist for the group, called the change “a pretty big improvement," though he did not suggest the OFA supported the bill.

The amendment package also stripped power from a new greenhouse gas regulation board that would wield influence over how money raised by the cap-and-trade program is spent. Rather than having direct control over a fund to distribute that money, the board would make recommendations that the governor can in turn choose to recommend to state lawmakers.

The move is likely a concession to Republicans, who have long said the board would be made up of “unelected bureaucrats” who would be spending money from the program.

“Legislators will be overseeing this program,” Dembrow said.

Other notable developments:

• The creation of a "just transition fund" that would help train workers for new jobs in a less carbon-intensive economy.
• Modifications to a loan program meant to help manufacturers pay for projects that reduce emissions
• Lawmakers say they will re-introduce a bill floated last year that would rebate some motorists, loggers and farmers for any increased fuel costs due to a cap-and-trade program.

The changes did little to address concerns, voiced by some stalwart cap-and-trade allies, that lawmakers had "over corrected" in drafting SB 1530 to ensure it passes this year. In particular, groups like Renew Oregon and Climate Solutions had complained about provisions that phased in fuel regulations by region and loosened rules for manufacturers with heavy emissions.

But even with few changes to those provisions, Renew Oregon signaled Tuesday it was ready to support the cap-and-trade bill.

“With this amendment, legislators have created a framework that can be built upon,” the coalition’s executive director, Tera Hurst, said in a statement. “This is an emergency and Oregon must step up now.”

Meanwhile, a spokesperson affiliated with the group Oregon Manufacturers and Commerce, a coalition of more than a dozen industrial entities that has consistently panned the proposal, was not impressed.

“This is more of the same, a deeply flawed piece of legislation crafted behind closed doors,” spokesperson Preston Mann said.

Shades of those arguments emerged in hours of testimony Tuesday, SB 1530’s first public hearing of the legislative session.

Residents of rural communities told lawmakers that cap-and-trade regulations would increase their prices, warning of the economic difficulties that would bring about for their businesses. Supporters railed off the emerging symptoms of global climate change, urging immediate action.

Signs of division over the bill began well before the initial hearing on the measure, as the House gaveled in for the first time on Monday. Acting in concert, Republicans made speeches on the floor warning Democrats to pull back their proposal.

“I must tell you is just simply not going to work for rural Oregon,” state Rep. Carl Wilson, R-Grants Pass, said at the time. “Good leadership realizes when you’re stuck. When it comes to cap and trade, this state is stuck.”

A more forceful protest is likely awaiting lawmakers Thursday, when the group Timber Unity plans to rally at the Capitol in opposition to SB 1530.

The group, ostensibly a grassroots coalition of truckers, loggers, farmers and others, was formed last year in response to the previous attempt to pass a cap-and-trade policy.