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Oregon’s Environmental Regulator Suggests a Cap-and-Trade Program

Oregon’s state legislature directed its environmental agency there to examine the implementation of a market-based system to reduce the level of carbon emissions in the state. And the Oregon Department of Environmental Quality has concluded in a report that it could be done through cap-and-trade program — without hurting businesses there.

At present, only California and the Northeastern states have such plans in place in the United States. Quebec also has one. In all cases, there are mandatory carbon cuts in place set up in part to stimulate new technologies to reduce those releases even more.

 “We focused this study on a ‘cap-and-trade’ program that would establish a firm and declining limit on most of Oregon’s GHG emissions and create a marketplace that could be linked to existing cap-and-trade programs in California and Quebec,” says the report by the Oregon Department of Environmental Quality, issued this week. It says the program would generate hundreds of millions in revenue.
Cap-and-trade works like this: Governments set pollution limits and then credits are either auctioned or allocated to industry. Those companies that are able to exceed the expectations can either bank their allowances for future use or sell them to other businesses that are unable to meet their obligations. As the ceilings come down, overall emissions then fall.
A story in Oregon Public Broadcasting says that several industries are opposed to such a plan. The Associated Oregon Industries, it adds, has opposed previous carbon reduction efforts and previously called cap and trade “one of the most unfair and regressive forms of taxation for Oregonian’s.”“Our concern with previous climate legislation is that the proposals were designed in a way that would create a competitive disadvantage for Oregon businesses while not reducing global emissions,” the association said in a statement, as noted by Oregon Public Broadcasting.

Many California businesses have also argued that forcing reductions in carbon emissions through a cap-and-trade platform prompts industry to move out-of-state. But the California Air Resources Board, which voted unanimously in October 2011 to enact such a program, says it is healthier for both the economy and the environment.

Proponents of the Northeast cap-and-trade plan also say that is creating jobs in the clean energy sector there. A previous report by Synapse Energy says the preponderance of the money collected under this free market program have been reinvested in energy efficiency, renewable energy and direct bill assistance. Critics, such as New Jersey Governor Chris Christie, however, are arguing that trading schemes are nothing more than a tax on electricity, which hurts industry.

As Environmental Leader has discussed, several Republican fathers are approaching the Trump administration and asking that a carbon tax get implemented. They say it is the most efficient way to price carbon and to subsequently reduce those releases. What’s the difference between a cap-and-trade plan and a carbon tax?
“A carbon tax does not require specific emission reductions, but does set the price to emit GHGs,” says the Oregon report, referring to greenhouse gas emissions. “The flexibility offered by cap-and-trade provides some benefits compared to a carbon tax. In addition to providing certainty on emission reductions, cap-and-trade offers the state tools to better directly mitigate impacts to specific businesses and should produce emission reductions at a lower overall cost.”
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