Agenda Packet 2-11-19 Joint Work Session

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M E M O R A N D U M EUGENE WATER & ELECTRIC BOARD TO: EWEB Commissioners, Mayor and City Council FROM: Jason Heuser, EWEB Public Policy and Government Affairs Program Manager Frank Lawson, General Manager DATE: January 31, 2019 SUBJECT: Oregon Legislative Update re: Carbon Policy OBJECTIVE: Information Only Issue This me mo is an overview of EWEB’s position and work on carbon cap and trade state legislation for discussion at the February 11, 2019 joint meeting of the EWEB Commissioners and City Council. Background The Oregon Legislature is expected to introduce legislation on February 1st in the House and Senate establishing a state carbon cap and trade program. Known as the “Clean Jobs Bill”, the legislation would cap and price greenhouse gas (GHG) emissions and reinvest these proceeds into carbon reduction measures. In 2018, the legislature created the State’s Carbon Policy Office (CPO) within the executive branch, staffed by the Governor’s office and the Oregon Department of Environmental Quality (DEQ). EWEB has been working with the CPO on the development and design of a cap and trade program as it relates to the electricity sector. Discussion The proposed Clean Jobs Bill would cap and reduce Oregon’s emissions to 80 percent below 1990 levels by 2050. In response to recent updates in climate science on the importance of emission reductions in the next 10 years, the legislature may consider adopting an interim target to reduce emissions to 45 percent below 1990 levels by 2035. Regulated sectors of the economy would primarily include Transportation, Energy (electricity and natural gas), and Large Industrial Sources. It is anticipated that the legislation will use a threshold of over 25,000 metric tons of annual CO2e GHG emissions to determine which entities have a compliance obligation. This compliance threshold targets large emitters, not individuals or small businesses/institutions. A cap and trade program sets an economy wide emissions cap, but does not cap any individual entity, nor dictate any specific measures they must take. An entity covered by the program must obtain and retire allowances equal to its reported emissions over a given compliance period. Each entity ma y decide what compliance action is most cost effective, whether to change business practices to reduce emissions or instead choose from a variety of other compliance options. An ATTACHMENT G February 11, 2019, Joint Work Session - Item 1