The Facts About Cap and Trade in Oregon

Cap And Trade Drives Up The Cost Of Living for Oregonians

Cap and trade will drive up the cost of living for Oregonians, particularly those in rural areas who drive longer distances and have less access to transit. Companies forced to pay for cap and trade will simply pass along the cost to consumers in the form of higher prices.

  • Economic estimates show that the average Oregon household will pay between $500 and $1500 more per year depending where they live in Oregon[1].
  • Gasoline will increase immediately by an estimated $.16 per gallon and then increase more over time as the cost of carbon increases[2]. Rural Oregonians rely more on their personal vehicle, meaning they’ll be disproportionately impacted by the increase in gas costs.
  • Oregon lawmakers recently adopted a $.10 per/gallon gas tax increase. That’s on top of costs associated with the low-carbon fuel standard, which has also significantly increased gas prices. These cost increases combined with the $.16 increase associated with cap and trade would leave Oregonians paying the third highest gas prices in the country, behind only Hawaii and California [3].
  • Natural gas prices and other utility bills would skyrocket under a cap and trade program. NW Natural has estimated double-digit rate increases in the first year of the program, with rates rising by as much as 53% by 2040.

Cap And Trade Reduces The Number Of Living-Wage Jobs

Cap and trade will reduce the number of living-wage, manufacturing jobs, which are so important to providing opportunity in rural communities. This will only deepen the economic division between Portland and rural Oregon.

  • Cap and trade drives up energy costs for employers. Since enacting its cap and trade program, California’s average industrial electricity rate has gone from 44 percent above the national average to 86 percent above the national average[4]. This has driven out energy-intensive industries like manufacturing.
  • Cap and trade shifts manufacturing investment to other states. California receives only 2.7 manufacturing investments per 1 million people; Kentucky receives 40 investments[5]. California’s rate of growth in new and expanded manufacturing plants has been half the national average over the last decade[6].
  • California’s economic growth is highly concentrated in the Bay Area, where 44 percent of the state’s GDP growth has come since 2010. The rest of the state – rural areas that have more regulated industries – has grown at half that rate.[7]
  • Industries like manufacturing compete in regional and global markets. Cap and trade would dramatically increase the cost of production and put Oregon manufacturers at a competitive disadvantage with their peers, potentially leading to lost or relocated jobs.

Cap And Trade Is Not Designed To Reduce Greenhouse Gas Emissions

Cap and trade is not a system designed to reduce greenhouse gas emissions. It’s a system designed to raise money for the government, and unelected bureaucrats will be allowed to raise the tax on greenhouse gases without a vote of the legislature.

  • Cap and trade gives unelected bureaucrats the authority to raise the cost of carbon on small businesses and consumers without a vote of the legislature. The bill currently being considered by Oregon lawmakers would raise as much as $700 million per year. This money can then be spent by Salem politicians on whatever they want. 
  • Cap and trade has not worked in California. According to the California Air Resources Board, only a small fraction of California’s overall reduction in greenhouse gas emissions can be attributed to their cap and trade system.[7] The vast majority of emissions reductions in California have come from reduced economic activity due to the Great Recession, an abundance of hydropower in 2016 that reduced carbon-emitting electricity generation, and a new law that increased the amount of renewable energy California utilities are required to deliver to customers.
  • Despite its costly cap and trade program, California’s carbon emissions aren’t going down at a faster rate than Oregon’s, which already has the 6th lowest carbon emissions per capita in the nation[8]. In fact, between 2000 and 2016, Oregon reduced its GHG emissions by 11.4 percent, and California reduced its emissions by only 8.1 percent[9].

Give New Laws That Reduce Greenhouse Gases A Chance To Work

There are significant new laws in Oregon designed to reduce greenhouse gases that haven’t even taken effect yet. We should give them a chance to work.

  • 39 percent of Oregon’s greenhouse gas emissions come from transportation[10]. Oregon lawmakers enacted a new Low Carbon Fuel Standard to address these emissions – a policy that may add $.15 to a gallon of gas as early as next year.  As we’ve seen in California, cap and trade and LCFS compound one another to drive up the price of gas even higher.
  • Oregon recently enacted a new law to prohibit coal-generated electricity and increase to 50 percent the amount of renewable energy.
  • In 2020, Oregon’s largest emitter of carbon dioxide and last remaining coal plant – the PGE Boardman facility – will be transitioned to clean fuel.
  • Oregon emissions represent just a tiny fraction of global emissions. Scientists have said an Oregon cap and trade program would have an “imperceptible” impact when it comes to further protecting our environment.

Footnotes:

  • [1] FTI Consulting, Oregon Cap and Trade – An Economic Impact Analysis of SB 1574 (2016)
  • [2] Ibid
  • [3] AAA Oregon/Idaho, February 2019
  • [4] U.S. Energy Information Administration, 2018
  • [5] Conway Data / Site Selection Magazine’s investments with NAICS codes, U.S. Census Bureau population statistics
  • [6] Labor Market Information Department, U.S. Bureau of Labor Statistics, 2018
  • [7] California Hit Its Climate Goal Early — But Its Biggest Source Of Pollution Keeps Rising, Los Angeles Times, 7/23/18
  • [8] US Environmental Protection Agency / US Energy Information Administration
  • [9]California Air Resources Board; Oregon Department of Environmental Quality
  • [9]Oregon Greenhouse Gas Emissions Inventory by Sector, Oregon DEQ 2016/li>