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A simple message to Clean Energy Jobs Bill supporters: This is not a comprehensive climate solution

By - Center for Sustainable Economy, January 30, 2018

Climate change is one of the most daunting challenges humanity has ever faced and requires a commensurate policy response. A robust climate agenda would consist of a number of key interventions to holistically address the issue, including:

  • Ramping down all major sources of greenhouse gas emissions as rapidly as possible;
  • Making climate smart production the law not the exception;
  • Catalyzing wholesale changes in consumer behavior and public purchasing to scale up demand for goods and services with minimal carbon footprints;
  • Halting construction of new fossil fuel infrastructure;
  • Making a just transition to a 100% renewable energy and energy efficiency platform;
  • Divesting from the fossil fuel industry and redirecting those funds into sustainable alternatives;
  • Ensuring that communities most impacted by the consequences of climate change and risks associated with fossil fuel infrastructure and pollution are prioritized in adaptation plans and projects;
  • Halting the expansion of suburban sprawl and freeways and ensuring that we move as quickly as possible to public transit for all, and;
  • Rebuilding the resiliency of natural landscapes made vulnerable to climate change by bringing an end to industrial-scale forestry and agriculture practices and ensuring our land use practices enhance the drawdown—not the continued release – of carbon from the atmosphere.

Oregon’s Clean Energy Jobs (CEJ) bill barely scratches the surface of these problems. As such, it should not be hyped up as a comprehensive climate solution for the entire state economy, but explained for what it is – a limited experiment in creating some green jobs and generating public revenues through a market-based greenhouse gas reduction mechanism that will be applied to about 100 facilities and affect just a fraction of the carbon emissions attributable to production, consumption and trade activities in the state.

Most activities that pollute or undermine climate resiliency will be exempted.

What’s off the table as CEJ heads for the 2018 legislature? Any of the consumption-related emissions associated with purchases of goods and services by businesses, government agencies or consumers, for starters. The Department of Environmental Quality has been keeping track of consumption-related emissions for quite a while now, and they currently average over 75 million metric tons of carbon dioxide equivalent per year (75 mmt CO2-e/yr), substantially more than what is counted in the state’s official emissions inventory (62 mmt CO2-e/yr). Climate smart procurement standards for government agencies and businesses receiving public support would be one simple mechanism to begin to address this.

All land use activities are exempt. Despite being the number one source of greenhouse gas emissions in the state, the CEJ legislation exempts Big Timber and its industrial scale clearcutting practices. Not only are these practices carbon intensive but they also undermine climate resiliency by maintaining millions of acres in a degraded condition that is more susceptible to fire, insects, disease, flashfloods, landslides, water shortages and warm waters that kill salmon. Simple amendments to fold the timber industry into CEJ have been proposed, but not yet embraced.

Concentrated animal feedlot operations (CAFOs) and massive cattle herds are off the hook as well despite methane emissions that are over 86 times more potent for trapping heat than carbon dioxide. So too are chemical intensive agriculture operations, or developers who clear valuable carbon sequestration lands for automobile dependent sprawl. Globally, these land uses account for a quarter of all emissions. With so much of our state’s land base devoted to forestry and agriculture and with Oregon bursting out of its seams with new growth these exemptions mean a huge wasted opportunity for global leadership.

The proposal adopts the most limited scope of emissions to regulate.

Even on its own terms CEJ gets a “C” or less for completeness and rigor. There are many approaches in the proposed bills that reflect the low bar rather than standards set by science and best practice. Take the scope of emissions regulated at the few facilities that will be chosen to participate. Life cycle analysis (LCA) is the gold standard in scientific circles since it quantifies all the emissions attributable to an economic activity regardless of where they occur. Washington State’s Department of Ecology uses this approach in its environmental assessments conducted under its State Environmental Policy Act, and it has been embraced by thousands of corporate sustainability leaders worldwide.

At the other end of the spectrum is the ‘in-boundary’ scope that seeks to regulate only the emissions that occur within state boundaries. So a project like the proposed Jordan Cove liquefied natural gas (LNG) export facility – if constructed – would be off the hook for all the fugitive methane emissions stemming from fracked gas upstream and all the combustion related emissions in downstream markets in Asia. By opting for the in-state approach, CEJ will replicate a failure of greenhouse gas accounting at the national level and help mask emissions associated with fossil fuel exports – which have increased over 1000% since 2009 and now top 620 mmt CO2-e/yr. If Jordan Cove is constructed, Oregon will be contributing another 37 million metric tons a year to these off the books emissions. Oregon should do better and abandon the in-boundary method in favor of LCA whenever practicable not only for purposes of the CEJ but to be comprehensive in its annual greenhouse gas reports.

A growing number of loopholes and exemptions.

Another weakness comes from loopholes and exemptions for sources the legislation purports to regulate – electricity, industrial processes, and fossil fuels. All facilities that emit less than 25,000 metric tons of carbon dioxide per year are exempted. That’s equivalent to the annual emissions associated with about 5,700 passenger vehicles. The threshold should be much lower. In the Senate version of the bill, the semi-conductor industry is exempted through at least 2025.  Marine and aviation fuels are exempted. And the exemptions and loopholes continue to grow with each new version of the bill. The most recent iteration of the legislation will allow any polluter deemed to be ‘trade exposed’ to receive 90% of their pollution allowances for free with no firm date as to when they will have to start bearing the costs of that pollution.

Failure to halt the expansion of fossil fuel infrastructure.

Another key omission from CEJ is the issue of new fossil fuel infrastructure. The scientific consensus is to leave all undeveloped reserves in the ground, and a ban on new fossil fuel infrastructure is the appropriate policy response along with a commitment to a 100% renewable energy platform. The City of Portland led the way in 2016 and 2017 through its Fossil Fuel Terminal Zoning Amendments and 100% Renewable Energy policy (and Portland called on the State of Oregon to set 100% renewable energy goals). In January, 2018, the Oregon Court of Appeals affirmed the city’s Constitutional authority to prohibit new fossil fuel infrastructure to protect the health and safety of residents. Senator Merkley is a strong proponent for both policies and introduced legislation in Congress in 2017 to this effect. CEJ can easily be amended to scale up Portland’s success and follow Senator Merkley’s leadership on these issues.

Inadequate safeguards to prevent fraudulent offset projects.

And then there is the issue of offsets, which allow polluters to keep polluting and, ostensibly, pay for more cost-effective emissions reductions elsewhere. Offsets are often embraced as win-win solutions for climate and improved agriculture and forestry practices but in reality are replete with perverse incentives and a failure rate so high that the GAO and researchers for the European Union have warned climate policy makers off. Offsets trade emissions reductions that can be achieved with certainty for ones that only have a probability of success – and a low one at that if you read the details of the GAO and EU critiques. In the EU, a 2016 report found that 85% of the offsets purchased were not providing real, measurable and additional emission reductions.

Offsets are not only low probability but create the wrong incentives, as noted by a 2012 study commissioned by the National Bureau of Economic Research. You have to be doing harmful practices to get paid not to do them anymore – a textbook illustration of moral hazard. If harmful practices are incentivized, they will proliferate. Adverse selection is another perverse incentive. Polluters who are already planning to reduce emissions have an incentive to mask or delay these plans in order to get paid for doing it. A better system of incentives would be to reward those already practicing climate smart forestry and farming or implementing state of the art emissions reduction techniques to provide incentives for them to expand their holdings and operations.

If offsets are retained, then CEJ should at least adhere to principles of good governance, which would allow citizens free access to information about who is buying them, who is selling them, what the arrangements look like and what the climate impacts are. Citizens ought to be provided opportunities for commenting on these projects and challenging them in court if experts they work with uncover fraud. A citizen’s suit provision would go a long way toward improving accountability in the offsets market.

Lack of safeguards to ensure that climate investments are made wisely.

While CEJ is laudable for generating considerable public revenues (~$700 million a year) for green investments, proceeds are earmarked for three broad buckets without adequate sideboards to ensure that the public is getting the biggest bang for the buck and not having funds used for questionable purposes. For example, 20% of the funds will be earmarked for projects that “promote resiliency to disease and forest fires” – code words for discredited commercial logging projects on public lands under the guise of forest health and wildfire risk reduction.

Scientific studies over decades have shown that in most cases these logging interventions make matters worse. Commercial logging invariably increases carbon emissions and could easily make forests and watersheds less resilient instead of more resilient. The appropriate sideboard in this situation is to amend CEJ to bar use of Climate Investment Fund revenues for commercial logging projects and instead focus on climate smart forest restoration projects. These include road decommissioning, culvert replacement, prescribed fire prevention and weed removal, conserving roadless areas, and non-commercial thinning of dense tree plantations to expedite their conversion back into climate smart and resilient forests.

What we need is a solution that is fair, comprehensive, and scientifically rigorous.

Clearly,  Clean Energy Jobs is not a comprehensive climate solution. Though there are climate benefits to be gained from investments in green energy and resilience, the enormous exemptions, exceptions, allowances, and loopholes in current drafts of CEJ, ironically, create the possibility that the energy and effort our state will expend to implement this program could result in no net climate benefits for Oregon’s residents and another failure to meet a new round of climate commitments. And, while we wait for the program to be implemented (beginning in 2021), it seems likely that the legislature will adopt a wait and see approach until enough data has been generated to evaluate the successes and failures of the program. If our legislators and public are left with the impression that CEJ is a comprehensive strategy for tackling our largest carbon emitters– this legislation could delay and impede significant reforms in the forestry and agriculture sectors as well as efforts to prohibit new fossil fuel infrastructure and move aggressively toward a just transition to a 100% renewable energy powered economy.

Unless CEJ is amended significantly and the exemptions, exceptions, allowances, and loopholes enumerated above are addressed, the resulting program will not come anywhere near the type of comprehensive climate strategy we need from our leaders. Oregonians must insist that CEJ be transformed from what looks like the least we can do to something that is fair, comprehensive, scientifically rigorous, and in line with Oregonians’ passion for leading the way on all things green and sustainable.

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