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The Climate Trust | Oregon Cap and Trade Could Make Industry More Competitive

Oregon Cap and Trade Could Make Industry More Competitive

Agriculture, Forestry, Policy, Scorcher

Sheldon Zakreski, The Climate Trust
Weekly Policy and Finance Update – February 26, 2018

THE BOTTOM LINE.

Oregon’s agriculture and forest industries are right to be concerned about cost increases, but cap and trade has the potential to lower their costs and make them more competitive, not less.

Oregon’s legislature has been working diligently to pass a carbon cap and invest bill during the 2018 session. This effort has been met by two lines of opposition. The first, that Oregon’s 35-day session is too short to pass such a complex bill. The second, that passing this bill will lead to cost increases that will put companies out of business.

The House has moved to nullify objections over session length by revising its bill to first commit to the cap and invest carbon pricing policy, which agrees to reduce emissions to 20% below 1990 levels by 2050. The details on how a cap and invest system would be structured to achieve that emissions reduction objective would be sorted out later in the 2019 long session.

However, this still leaves questions around the economic effects of this bill. During several sessions, opponents regularly raised the prospect of potential cost increases, such as a 16 cent per gallon increase at the pump. Agriculture and forestry are also highly competitive, low margin, commodity-based sectors harboring legitimate concerns about cost increases. However, the revenues from a cap and invest program can be used to provide capital to invest in critical infrastructure, such as more fuel-efficient machinery and equipment. At the end of the day, this lowers their total energy bill making them more competitive, not less.

Perhaps this is why Devon Mathis, who represents an agriculture industry district, voted in favor of extending cap and trade in California despite agriculture sector opposition. His district has received over $54 million in cap and trade funding leading Representative Mathis to state, “It is encouraging to see the extension of the cap and trade program benefiting our local agricultural industry. These monies are truly helping the local guy on the ground stay in business.”


Top News Headlines

Cap-and-trade brings in money, despite Republican backlash 
Luis Hernandez, Visalia Times-Delta, February 11, 2018

Oregon cap-and-invest bill may get new timeline
Tracy Loew, Statesman Journal, February 20, 2018

Ag Opinions Divided on Oregon cap and invest bill
George Plaven, Capital Press, February 9, 2018


Nothing But Clear Skies Blog

Solving State Budget Challenges with Cap and Invest 
Sheldon Zakreski, February 5, 2018

Recent Scorcher

In-State Offsets Preference for Oregon Could Raise Issues of Legality Peter Weisberg, Feb 20, 2018
Harnessing the Power of the Private Sector with Opportunity Zones Sean Penrith, Feb 12, 2018
Solving State Budget Challenges with Cap and Invest Sheldon Zakreski, Feb 5, 2018

Image credit: Flickr/Mark Jensen

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