Research & Commentary: Oregon Cap-and-Trade Proposals and Renewable Power Mandates

Published February 2, 2016

Legislators in Oregon are now proposing a new carbon dioxide cap-and-trade program. The legislature rejected a proposed cap-and-trade plan in 2015. The legislation, titled the Healthy Climate Act (HCA), would establish a market for carbon dioxide in the state by 2020, phasing-in and gradually lowering hard caps on carbon dioxide emissions.

Mirroring the cap-and-trade program implemented in California by the state’s Air Resources Board, HCA’s aims to cut Oregon’s greenhouse gas emissions to 20 percent below 1990 levels by 2025, 45 percent below 1990 levels by 2035, and 75 percent below 1990 levels by 2050. Any facility emitting more than 25,000 tons of carbon dioxide would be required under HCA to purchase allowances that simultaneously decrease in volume and increase in price over time.

“The act would have the state auction off emissions allowances to companies in the utility and industrial sectors and, eventually, to companies that sell transportation fuel,” explains an editorial published in the Albany Democrat-Herald. The funds raised from these auctions would then be used on transportation projects, ratepayer credits, and “grant programs to fund job creation, training and mental health services for those affected by climate change or climate change policies.”

A second proposal being considered in the Oregon Legislature, the Clean Electricity and Coal Transition Plan (CECTP), would eliminate electricity produced in Oregon by coal-powered plants by 2035 and would mandate utilities companies provide 50 percent of customer demand with renewable energy by 2040. Both Portland General Electric and PacifiCorp, the state’s two largest electricity suppliers, are backing CECTP in favor of HCA, preferring to eliminate coal altogether instead of setting up a cap-and-trade plan.

“The biggest problem with [CECTP] is that the two renewable technologies most preferred by radical environmental groups ­– solar and wind – are intermittent sources that randomly fail to provide any electricity to the grid,” wrote John A. Charles, president and CEO of the Cascade Policy Institute. “During the winter months when utilities must provide the highest levels of reliable power – the so-called ‘peak periods’ – wind and solar combined supply only about 5% of the necessary electricity. This means that ratepayers will be forced to spend billions subsidizing uneconomic renewable power facilities, and then pay a second time for gas-fired generators that will be necessary to back up the unreliable wind and solar plants.”

A cap on carbon dioxide emissions and the expansion of renewable power mandates (RPMs) do not guarantee emissions reductions, but they do guarantee poor and middle-income families will pay more of the burden than the so-called “polluters” do. California’s cap-and-trade plan has caused energy prices to increase and has forced a million households to spend at least 10 percent of household income on energy costs, a situation experts refer to as living in “energy poverty.” In impoverished and developing counties, as many as 15 percent of households are classified as energy impoverished.

RPMs force consumers to purchase expensive energy from the wind and solar power industries, causing the most harm to those who can least afford to pay higher power bills. A study published in 2014 by the Brookings Institution found wind power costs on average 50 percent more per kilowatt hour than conventional power, while solar power is 200 percent more expensive. H. Sterling Burnett, an environment and climate research fellow at The Heartland Institute, says retail electricity prices in states with renewable power mandates are rising twice as fast as the national average.

The best policy option for Oregon’s state legislators is to repeal all of these costly and destructive mandates and energy subsidies. If a full repeal is not possible, rolling back RPMs, freezing them at current levels, or making these mandates voluntary would help avert some of the future economic pain that will be inflicted on businesses and individuals in Oregon.

The following documents provide more information on cap-and-trade programs, renewable fuel mandates, and climate change.

Ten State Solutions to Emerging Issues
This Heartland Institute booklet explores solutions to the top public policy issues facing the states in 2016 and beyond in the areas of budget and taxes, education, energy and environment, health care, and constitutional reform. The solutions identified are proven reform ideas that have garnered significant support among the states and with legislators.

Five Myths of Cap-and-Trade
Articles supporting cap-and-trade programs rest on a number of fallacies. In this article by Todd Myers of the Washington Policy Center, Myers identifies and explores five persistent myths concerning cap-and-trade, including the belief that a cap on carbon dioxide emissions guarantees emissions reduction.

The Carbon Tax Shell Game
Oren Cass of the Manhattan Institute says the carbon tax is a shell game. The range of designs, prices, rationales, and claimed benefits varies so widely that assessing the actual validity of most proposals is nearly impossible to accomplish. In this article for National Affairs, Cass says the effect of carbon dioxide taxes on emissions has proven to be insubstantial, a fact he says is ignored by the tax’s proponents when promoting its purported benefits. Cass also says carbon dioxide taxes’ negative fiscal effects are claimed to be offset by efficiency improvements and by promising the revenues will be spent to offset the costs, but he says the same revenues are often promised to different constituencies to accomplish completely different and largely incompatible goals.

Assessing the Social Costs and Benefits of Regulating Carbon Emissions
The government is required to quantify the costs and benefits of regulations they propose. In the context of regulations pertaining to carbon dioxide emissions, various agencies have been using differing estimates of the net social cost related to carbon dioxide. In response, an interagency working group (IWG) was created in order to establish a consistent and objective “social cost of carbon.” The range of estimates of the social cost of carbon produced by the IWG is too narrow and almost certainly biased upwards. Using better models and the most recently available evidence on climate sensitivity, this study from the Reason Foundation finds the range of the social cost of carbon should be revised downwards. The study states carbon dioxide emissions may actually have a net beneficial effect on the environment.

Less Carbon, Higher Prices: How California’s Climate Policies Affect Lower-Income Residents
This study from Jonathan Lesser of the Manhattan Institute argues California’s clean power regulations, including the state’s renewable power mandate, is a regressive tax that harms impoverished Californians more than any other group.

Three Steps to Reducing Carbon Emissions Effectively
Todd Myers of the Washington Policy Center says Washington State’s climate policies are the result of a destructive cycle: Exaggerated promises are adopted, and then when they fail, politicians blame opponents. This cycle creates more partisanship and encourages even larger, less workable promises. Instead of trying to force lifestyle changes, as many environmental activists have proposed, Myers says Washington State should utilize technological advancements that have the potential to improve energy efficiency.

Why Scientists Disagree About Global Warming
In this book published by The Heartland Institute, authors Craig Idso, Robert M. Carter, and S. Fred Singer say the most important fact about climate science, which they say is often overlooked, is scientists disagree about the environmental impacts of the combustion of fossil fuels on the global climate. There is no survey or study showing “consensus” on the most important scientific issues, despite frequent claims by advocates to the contrary. Scientists disagree about the causes and consequences of climate for several reasons. The authors say the only “consensus” among climate scientists is human activities can have an effect on local climate and the sum of such local effects could hypothetically rise to the level of an observable global signal. The key questions to be answered, they say, are whether the human global signal is large enough to be measured, and if it is, does it represent or is likely to become a dangerous change outside the range of natural variability? On these questions, an energetic scientific debate is taking place on the pages of peer-reviewed science journals, say the authors.

Climate Change Reconsidered II: Physical Science
Climate Change Reconsidered II: Physical Science is an independent, comprehensive, and authoritative report on the current state of climate science, published in October 2013. It is the fourth in a series of scholarly reports produced by the Nongovernmental International Panel on Climate Change, an international network of climate scientists sponsored by three nonprofit organizations: the Center for the Study of Carbon Dioxide and Global Change, the Science and Environmental Policy Project, and The Heartland Institute. (Also see the Climate Change Reconsidered II: Physical Science “Summary for Policymakers”:

Climate Change Reconsidered II: Biological Impacts
Released on April 9, 2014, Climate Change Reconsidered II: Biological Impacts is an independent, comprehensive, and authoritative report on the impacts of climate change on plants, terrestrial animals, aquatic life, and human well-being. (Also see the Climate Change Reconsidered II: Biological Impacts “Summary for Policymakers”:


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Environment & Climate News website at, The Heartland Institute’s website at, and PolicyBot, Heartland’s free online research database, at

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