There’s a lot of discussion going on right now about a proposed bill to increase environmental efforts through the use of a cap and trade system. Supporters of the bill commend its focus on reducing carbon emissions and providing financial investments towards green initiatives. Opponents feel the bill may increase the costs of electricity and negatively impact rural communities that depend on farming.
Without getting into the debate of “should we or shouldn’t we” implement a cap and trade system, this article is intended to provide a few basics about what cap and trade is all about.
Here’s a little history…
Cap and Trade policies have been discussed and implemented worldwide since the early 90’s. In 1992, the United Nations Framework Convention on Climate Change put forth a plan for countries to participate in a cooperative program to commit to lower carbon emissions through a system of limitations (caps) and the ability to exchange excess allowances not used (trade.) This program was named the Kyoto Protocol.
In 2012, an amendment to the Kyoto Protocol called the Doha Amendment was adopted. This Amendment was intended to clarify parts of the Kyoto Protocol that were difficult to adhere to and update it for current needs and trends. As of February 2019, 125 countries are participating in the program.
The United States has had interest in these programs, but has not yet committed to them. One concern the US has had is the absence of developing countries in the program. Because developing countries lack sophisticated technology to decrease carbon emissions and other pollutants and/or waste material, these countries are seen as significant contributors to the greenhouse effect. The US also has concerns about how cap and trade would impact energy prices while the results of cap and trade are still questionable.
Last year, House Speaker Tina Kotek (D-Portland) and Senate President Peter Courtney (D-Salem) created the Joint Committee on Carbon Reduction that is bringing forth an updated Bill to Oregon intended to reduce carbon emissions called House Bill 2020.
How Cap and Trade would work in the proposed House Bill 2020…
House Bill 2020 would cover fuel suppliers, utility companies, and large manufacturers (those with air quality permits to emit over 25,000 metric ton of carbon dioxide equivalent per year.) Overall, it is estimated that approximately 100 companies in Oregon would be impacted.
Step 1, the CAP: The State of Oregon would set a limit, or cap, on carbon emissions. Those companies that emit over 25,000 MTCO2 per year would be required to purchase an additional pollution permit called an “allowance.” In the future, this cap would be reduced with a goal of getting to 80% of the 1990 carbon emission levels by 2050.
These permits would be auctioned by the State of Oregon, with the proceeds going to programs designed to increase energy efficiency and environmental health. Some examples of how investments would be made include programs to promote solar panels and weatherization, wildfire prevention and drought protection, and financial assistance to dislocated workers for job training.
Step 2, the TRADE: If companies don’t use the allowance they have purchased or have excess room between their actual emissions and the cap, they are able to trade those pollution permits. Additionally, forest land owners could get credits for farming projects that will grow more plants and trees that absorb carbon dioxide from the atmosphere, and they can sell those credits to companies who are exceeding their caps.
Overall, the system of Cap and Trade is intended to lower the overall carbon emissions of the group of participants with a program that allows companies who emit less pollution to balance out those who emit more pollution.
Regardless of your feeling about House Bill 2020, it’s a good effort from Oregonians to put more focus on keeping our environment clean and healthy for generations to come. At Rogue Valley Clean Cities Coalition, we’re invested in helping everyone find clean, renewable energy solutions that are the right fit for their needs.
Want to learn more about renewable and clean energy solutions?
Visit us at the Rogue Valley Clean Cities Coalition today! The Coalition works to enhance the livability and sustainability of Rogue Valley residents.