Governorís Carbon Representatives Meet with Affected Businesses

Published Thursday, June 28, 2018

As legislators continue working toward carbon-reduction legislation for the 2018 Session, the Governor’s Carbon Policy Office recently took an important step toward including the most-affected businesses in the discussion. 

On June 21, the Carbon Policy Office convened a small group of manufacturers for the first Energy Intensive Trade Exposed (EITE) work group meeting. Kristen Sheeran, the Governor's Climate and Energy Policy Advisor, and two other staff members from her office participated in the meeting. They met with about 10 representatives of business, including Oregon Business & Industry, Roseburg, Precision Castparts, Georgia Pacific, Entek, EVRAZ and Ash Grove Cement.

The meeting gave EITE businesses an opportunity to provide input on how Oregon manufacturers would be affected by cap-and-trade legislation. The EITE work group is separate from a larger Business Advisory Group (BAG), which convened June 11. As she did in the BAG meeting, Sheeran emphasized the goal of the proposed legislation is to reduce carbon to achieve the greenhouse gas (GHG) goals established by HB 3543 in 2007.

State officials at the meeting said they are interested in how to design an Oregon specific program. To work toward that goal, there will be more discussions and examinations of how other entities have addressed EITEs under a cap-and-trade program.

Manufacturer representatives discussed the challenges Oregon-based companies face competing within their own industries in Oregon, nationally and globally. They emphasized the manufacturers, which will be the businesses most affected by cap-and-trade legislation, drive the Oregon economy both directly and indirectly. 

The Oregon regulatory environment, including existing rules on emissions, creates disadvantages in the market for manufacturers, attendees told the state officials. Attendees also told the state officials how emissions sometimes are created as a result of other regulatory programs and how the layering of policies on top of each other without integration creates increased threats to their competitiveness.

Addressing a key concern of businesses, the Governor's Office clearly indicated that the level of emissions (25,000 metric tons) at which entities would be required to report data to the Oregon Department of Environmental Quality (DEQ) is still "under discussion." State officials also plan to solicit input and discussion regarding the point of regulation (direct regulation or upstream regulation).

There was also a recognition that businesses may need to be given some allowances from emissions charges. The Governor intends to solicit input on how those allowances are allocated and on what basis allowances would be given.

The Carbon Policy Office also said it recently selected a consultant to conduct the EITE study. Among other things, the study will include an analysis of the sensitivity of Oregon industries that may be directly regulated under a statewide carbon program to exogenous factors such as energy or carbon prices; as well as their trade exposure to markets without carbon pricing or regulation. 

The consultant, Vivid Economics of London, plans to engage directly with the group of industries and manufacturers who participated in the EITE meeting, as well as other businesses. This study will be completed by October. By August we expect to see a request for proposals for the macroeconomic study that will include natural gas costs and transportation.

Follow up with the EITE group is expected in July as the state is working on a tight timeline.