Oregon Governor Kate Brown (D) announced on Monday that she is prepared to use her executive order privileges to push forward the state’s contentious cap-and-invest plan.
The legislation, which would make Oregon just the second state in the nation to put an economy-wide price on greenhouse gas (GHG) emissions, was derailed after 11 Republican Senators fled the Capitol for nine days, hiding out in nearby states. Without a 20-Senator quorum, a vote could not be held.
The embattled lawmakers returned only after assurance from Senate President Peter Courtney (D) that HB 2020 was dead, with just a day to spare in the legislative session. The bill’s defeat was a devastating blow to the thousands of Oregonians who tirelessly advocated for an action that would have significantly reduced GHG emissions in the state, and invested revenue in the communities that need it most.
For a moment, it appeared that any hopes of the cap-and-invest program becoming law this year had been squashed. However, Brown said in a press conference on Monday that climate inaction was not an option, adding that she would use the powers of her office to advance cap-and-invest in her state.
Kate Brown stands firm on cap-and-invest
Gov. Brown, who was elected on the promise of strong climate action, spent the bulk of her post-session address to the legislature discussing her plans to continue fighting for cap-and-invest. She indicated she may issue an executive order to ensure that cap-and-invest can still become law this session.
“Let me be very, very clear — I am not backing down,” Brown said. “There was a lot of hard work over the last couple of years since I first announced cap-and-invest as priority legislation. Good work, and frankly, many changes based on constructive industry feedback went into House Bill 2020.”
“Working on legislation is my preferred approach; collaborating across the aisle and around the state,” she said. “However, given the uncertainty that now permeates Oregon’s political system, I am also directing my staff and agencies to explore alternative paths in case these collaborative approaches do not lead to successful legislation. This includes the use of my executive powers and direction of state agencies.”
Brown announced she will:
- Direct the Carbon Policy Office to work with rural manufacturers to analyze the cost and competitiveness of their industries.
- Direct her staff to meet with transportation interests to discuss reducing GHG emissions in the sector and incentivize the transition to lower-emitting vehicles.
- Present proposed modifications to the legislation in the next few months. This legislation will still achieve the state’s GHG reduction goals at the lowest possible cost, while still continuing to grow the state’s economy.
In her speech, the Governor cited the growing effects of climate change, including wildfire threats, forest degradation, decreased agricultural yields, ocean acidification, among others. She also stated that if the program was delayed another year, it would have to be more aggressive in order to still meet the state’s emission reduction goals.
“The time pressures are still there,” she said, “and I’m committed to keeping those goals for our children and our children’s future.”
Tera Hurst, the executive director of the Renew Oregon coalition that has been lobbying for the bill for several years now, lauded Brown’s announcement.
“Governor Brown affirmed for Oregonians today there is unfinished business in 2019 on climate protection and she intends to use all the tools and powers available to her to finish it,” Hurt said in a statement.
A brief history of how we got here
The 2019 Clean Energy Jobs Bill Timeline
Beginning of the legislative session
Clean Energy Jobs bill first introduced in 2019 session
February 15th – March 2nd
7 public hearings held across the state
Bill passed out of Joint Committee on Carbon Reduction
Bill passed the House by a 36-24 vote, after six hours of deliberations
11 Republicans walked out of session to prevent the cap-and-trade bill’s passage
Members of the right-wing militia group the Three Percenters of Oregon wrote on Facebook they would do “whatever it takes to keep these Senators safe.”
In light of threats of violence, a session of the Oregon State Capitol was cancelled due to a warning from state police of a “possible militia threat.”
Sen. President Courtney announced the bill had lost some support among Democrats
GOP lawmakers return to finish out the session, and the bill was subsequently referred to the Senate Committee on Rules
The highly-anticipated cap-and-invest bill, more than a decade in the works, was progressing nicely through the legislature up until a few weeks ago. From the beginning of the 2019 legislative session, the political opportunity for a cap-and-invest program in Oregon was present. The bill was fervently supported by all the major players in the state government: House Speaker Tina Kotek (D), Senate President Peter Courtney (D), and Gov. Brown, among others.
Several newly-elected legislators also campaigned on the promise to support Clean Energy Jobs, and Democrats’ expanded their majorities in both chambers in the November 2018 midterm elections.
“My colleagues in the legislature & I were elected by Oregonians with a clear mandate to address the challenge of #climatechange,” Brown tweeted Monday.
My colleagues in the legislature & I were elected by Oregonians with a clear mandate to address the challenge of #climatechange. If that isn’t clear to anyone, just ask the young people who stood in our chambers this session & pleaded for a better future https://t.co/5jzQ8Fdc7U
— Governor Kate Brown (@OregonGovBrown) July 1, 2019
At the same time, Renew Oregon, a clean energy advocacy coalition tirelessly lobbied for the bill and worked to ensure it would not be weakened as industry and oil interests pushed against it.
The hard work seemingly paid off; the bill was voted through the Joint Committee on Carbon Reduction in late May, and then through the Ways and Means Committee. On Monday, June 17th, it passed the House by a 36-24 vote, after six hours of deliberations. It was largely expected to pass through the Senate before the session wrapped up on June 30th.
However, Senate Republicans, who had previously walked out this session in opposition to an education funding bill, decided they would employ the tactic once again despite signing an agreement in May prohibiting them from doing so.
On June 20th, Senate Minority leader Herman Baertschiger (R) announced his caucus would take action to prevent the cap-and-trade bill’s passage. Later that day, Sen. Brian Boquist (R) threatened Oregon State Police’s superintendent, saying “Send bachelors and come heavily armed. I’m not going to be a political prisoner in the state of Oregon.” Boquist now faces a formal complaint that will be taken up by a special committee next month. After his departure, his wife, Peggy, told CNN that the eleven GOP senators were hiding out in Idaho. While the Republicans hid, a GoFundMe page was created to help them cover their $500 per absent-day fee, which went on to raise nearly $44,0000.
Tensions only continued to escalate. On June 21st, members of the right-wing militia group the Three Percenters of Oregon wrote on Facebook they would do “whatever it takes to keep these Senators safe.” The Idaho chapter of the group wrote, “this is what the start of a civil war looks like.” Threats of violence were not taken lightly by Oregonian law enforcement, and so on June 22nd, a session of the Oregon State Capitol was cancelled due to a warning from state police of a “possible militia threat.”
Then, on June 26th, Sen. President Courtney announced the bill had lost some support among Democrats: “House Bill 2020 does not have the votes on the Senate Floor,” he said. “That will not change.”
Senator Laurie Monnes Anderson (D) was reportedly the Democrat that changed her mind in the wake of GOP pressure. But on Monday, Governor Brown maintained the votes were there prior to the Republican boycott. “Why would (Republicans) have left if House Bill 2020 didn’t have the votes?” she asked.
The eleven GOP lawmakers finally returned on June 29th to finish out the session, and the bill was subsequently referred to the Senate Committee on Rules. While many pronounced the bill dead, the Governor’s announcement now signals cap-and-invest could still be in the works.
The nitty gritty of what’s inside this complex legislation
The bill is 100 pages long, and one could spend several hundreds of pages analyzing its different components. It’s important to note that Oregon’s program is modelled after California’s, and will effectively link the state to the Western Climate Initiative.
The bill has also been amended hundreds of times. In her Monday speech, Gov. Brown rejected the view that the bill’s many amendments mean it is flawed. “I say it is a sign of a collaborative process and a good product,” she said.
Below I’ve outlined some of the most crucial components of this legislation.
A Declining Emissions Cap
HB 2020 sets a statewide, economy-wide cap on GHG emissions for all entities responsible for emitting more than 25,000 tons of carbon. About 100 entities, collectively responsible for 80% of the state’s GHG emissions, will be covered by the program.
The emissions cap declines over time in accordance with the state’s emission reduction goals, meaning that the number of emission allowances decreases each year. By 2035, the state’s emission levels must be 45% below 1990 levels, and by 2050, they must reach an 80% decline.
Quarterly Auctions for the State’s Highest Polluters
Allowances are initially sold to regulated entities via quarterly auctions, which can trade allowances between one another. Since Oregon will be a part of WCI, compliance entities in the state will be able to buy and sell to entities in California and Québec. That means Oregon’s allowance price will likely be the same as California’s. The floor price — or minimum price per allowance — is set to be $16.77 in 2021, rising annually until reaching $25.75 by 2030.
Exemptions for Some Industries
Some industries receive allowances for free, at least at the program’s inception.
- Emissions-intensive, trade-exposed (EITE) facilities, which are entities vulnerable to competition from other states, and could move to another state in the face of increased costs. From 2021 to 2024, they will be granted free allowances at a rate equal to 95% of their current emission levels, and from 2025 to 2050, they will be granted free allowances based on best available technology benchmarks. These benchmarks will be updated every nine years.
- Natural gas utilities: Will be allocated emission allowances according to the following:
- 15% of their emission allowances will be provided for free by the government.
- 25% of allowances will be purchased in auctions, a figure that will rise annually as the cap decreases. Auction revenue will go toward the climate investment fund.
- 60% of allowances will be “consigned”, meaning that they will initially be given to utilities for free, but utilities won’t be able to keep them. Instead, they will have to sell them to the market, and use proceeds earned by these sales to directly benefit ratepayers, by doing things like making homes more energy efficient providing bill rebates.
- Electric utilities: Investor and consumer-owned utilities will be granted 100% free allowances for now because of the carbon-reduction targets they’ve been forced to take under existing regulations.
The bill allows entities to purchase offsets for up to 8% of their compliance. At least half of these projects must have direct environmental benefits in Oregon.
Investments in Clean Transportation, Energy
Altogether, the program is expected to generate about $487 million in 2021, most of which (about 71%) will come from the transportation sector. Transportation-sector revenue will be invested in a Transportation Decarbonization Investments Account, for initiatives like rail infrastructure, bike lanes, and other public transport improvements.
This is notable because under the Oregon constitution, money raised by taxing transportation fuels must go to the Highway Trust Fund. Since the California Supreme Court ruled that allowances don’t count as a tax, proponents of Clean Energy Jobs believe Oregon’s Supreme Court will do the same.
Regardless of what is ultimately decided with transportation fuel revenue, the rest of the proceeds will go toward a Climate Investment Fund (CIF), which will largely fund energy efficiency, renewable energy, and community adaptation programs. Forty percent of these proceeds must go toward low-income, rural, or minority communities.
Additionally, $10 million annually must be invested into a just transition fund, to assist communities and workers transitioning away from fossil fuel economies.
A lot is still unclear, but Brown’s announcement is undeniably good news
While the Governor did not get into specific details on what she might be willing or able to do via executive action, her unwavering commitment to push forward the legislation is welcome news.
Through an executive order, Brown could call for a special session of the legislature spanning into the summer, but it’s very possible Republicans wouldn’t show up for the additional days.
“We are really in uncharted territories as far as my Republican colleagues are concerned,” said Sen. Michael Dembrow, who co-chaired the Carbon Reduction committee responsible for writing HB 2020 this session.
After her press conference, Gov. Brown took to Twitter: “Make no mistake: doing nothing to cap and reduce emissions is not an option. Not for our economy, our environment, or our children.”
What Brown is indicating would not be completely unprecedented. In 2003, it was Northeastern governors, not legislatures, who came together and announced their agreement to implement the Regional Greenhouse Gas Initiative. While some form of authority from the legislature would likely be needed in order for cap-and-invest to become law in Oregon, the state’s stringent emission reduction goals could be interpreted as a legislative mandate for executive action.
However, when California passed its own cap-and-invest program, it was backed by a Global Warming Solutions Act that explicitly called for a market-based mechanism to reduce emissions. No such legislation has passed in Oregon — yet.
For now, the future is hard to predict. But with a climate champion occupying the highest office in the state, Oregonians can rest assured Clean Energy Jobs won’t go down without a fight.