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Oregon Clean Energy Jobs Bill Could Become An Economic Engine And A Decarbonization Catalyst

By Silvio Marcacci, Energy Innovation's Communications Director

2018’s “Green Wave” election has set the stage for Oregon to lead the United States on climate action in 2019 by enacting statewide cap-and-trade legislation and accelerating complementary policy in its biggest energy-consuming sectors.

Governor Kate Brown focused on climate action in her re-election campaign, and legislative leaders have added momentum to the state’s most significant climate policy opportunity – the Clean Energy Jobs Bill would cut emissions while generating hundreds of millions for statewide investments.

Oregon's profound climate risks underscore need for action

Oregon’s climate action underscores the necessity of climate triage policymakers must exercise as temperatures rise:  quickly identify the biggest sources of emissions, then rapidly decarbonize each of those sectors.

The UN’s Intergovernmental Panel on Climate Change reports we have 12 years to avoid locking in dangerous climate change. Meanwhile, U.S. emissions rose 3.4% in 2018 even though the U.S. government acknowledges America risks hundreds of billions in economic damage, extreme weather disasters, and food scarcity without aggressive climate action.

These risks are especially profound in Oregon. The state’s economy depends on industries like agriculture, forestry, fishing, and outdoor recreation; more than 40% of its total electricity supply comes from hydropower. Rising temperatures and changing rainfall patterns threaten each of these pillars: Summer precipitation could fall 30%, snowmelt could happen up to a month earlier, wildfire acres burned could quadruple, and irrigation water shortages could happen eight out of every ten years.

Related economic losses could be staggering by 2040: $1 billion in annual fisheries losses, $266 million in annual cold-water fishing losses, $124 million in annual snow-based recreation losses, and $37 million in additional air conditioning costs. These risks are already real - nearly 80% of Oregon is stuck in "severe drought" and snowpack is 56%-70% of normal.

Two new proposals could make Oregon a national climate action leader

Fortunately, the same decarbonization policies that can prevent climate change can also drive economic prosperity, and state policymakers are embracing both sides of the equation. Two new proposals could vault Oregon to the forefront of U.S. climate leadership and accelerate its clean energy economy.

Late in 2018 Governor Kate Brown released her Oregon Climate Agenda, which proposed creating an Oregon Climate Authority. This new state agency would coordinate statewide clean energy programs and prioritize decarbonization efforts. While this would be the first U.S. state agency solely dedicated to climate action, the proposal is still conceptual and most details haven’t been released yet, so its ultimate impact is yet to be determined.

The more important proposal on Oregon’s horizon is the Clean Energy Jobs Bill, which was introduced late last week. This proposal would establish statewide carbon pricing through a cap-and-trade market featuring a steadily declining emissions cap requiring the state’s biggest polluters to purchase permits for emissions above the cap, and then link this program to the California-Quebec carbon market starting in 2021.

A steadily declining carbon cap with long-term certainty and ambitious goals sends an economic signal to businesses and consumers, rewards decarbonization efforts, and complements other clean energy policies like Oregon’s 50% by 2040 renewable portfolio standard.

The Clean Energy Jobs Bill would reduce statewide emissions up to an estimated 80% by 2050 while reinvesting hundreds of millions of dollarsin permit proceeds into projects that reduce emissions and benefit the state’s communities. “Oregon’s Clean Energy Jobs Bill is the kind of bold climate action we need,” said Climate Solutions Executive Director Gregg Small via email. “It reduces emissions and creates jobs, protects our forests and working lands, and strengthens the economy in communities that need it the most.”

Governor Kate Brown says she will sign the bill, Senate President Peter Courtney and House Speaker Tina Kotek both committed to passing it, and other state legislators say the legislation is all but certain to pass in 2019 after multiple pro-climate state legislators were elected in 2018.

Oregon Clean Energy Jobs Bill could be economic catalyst 

Experience shows the Clean Energy Jobs Bill could become an economic engine. California’s cap-and-trade program has generated nearly $10 billion in permit revenue for statewide re-investment since auctions began in 2012, and has reduced emissions roughly 12 million metric tons (MMT) cumulatively since 2015, while the state’s economy has grown to be the world’s fifth-largest.

More than 55,000 residents already work in Oregon’s clean energy sector, 50 times as many as those employed by fossil fuel industries, and this number is growing 11% annually – faster than the statewide average. These jobs typically can’t be outsourced, are often accessible with a high school or technical degree, and 11,000 of them are located in rural communities.

More than 850 Oregon businesses and more than 200 farms and ranches support the Clean Energy Jobs Bill, and 2017 research estimated increasing solar energy’s share of statewide electricity supply to 10% by 2027 would create 100,000 job-years and attract $5-$8 billion in private investment.

Compare this upside to coal generation’s dismal outlook – a December 2018 report to state regulators from PacifiCorp, Oregon’s second-largest utility, confirmed the bulk of its existing coal units cost more to operate than closing them and building new clean energy – and the trend is clear: The Clean Energy Jobs Bill is as much of an economic investment as it is an investment in a safe climate future.

Fossil fuel opposition, emissions reduction pace to determine Clean Energy Jobs Bill success

But while passage of the Clean Energy Jobs Bill seems likely, two factors – Washington State’s carbon tax defeat at the polls, and the bill’s emissions reduction target stringency – could determine its ultimate success.

In 2018, the oil industry spent a record $31 million persuading voters to reject Initiative 1631 in Washington State, which would have created a statewide carbon tax.  This avalanche of fossil funds led to its defeat, despite polling showing 64% of voters supported emissions reduction.  This cautionary tale shows that, even if policymakers successfully adopt enabling legislation, the fossil fuel industry could try to overturn it via statewide election.

Oregon’s emission reduction pace under the Clean Energy Jobs Bill also matters to its ultimate decarbonization efforts.  The proposed legislation includes an interim 2035 emissions target, but if that is removed during debate, the state could generate an extra 106 MMT CO2e by 2050 –a 13% total increase in cumulative emissions compared to a more ambitious pace.

A stringent interim target would also generate additional permit auction proceeds.  California’s example shows investing a significant portion of proceeds in clean energy or projects that increase climate resilience helps increase equity.

Strong Oregon climate action could become a national model

Climate change is already impacting Oregon, and the state risks billions in future economic damages.  Ambitious policy, in Oregon and beyond, can still prevent the worst impacts. By passing the Clean Energy Jobs Bill, state leaders could cut emissions and help spur a trend for others to follow.

“People around the country are watching what Oregon is doing,” said Small. “A strong climate program would be transformative for our state and become a model for other states – and potentially the federal government.”

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