Legislature-commissioned report finds carbon tax feasible for Ore. 

Source: Nathanael Massey, E&E reporter • Posted: Wednesday, December 10, 2014

A carbon tax in Oregon would have minimal effects on jobs and the economy, paving the way for the state’s Legislature to pursue carbon pricing in 2015, according to an analysis by researchers at Portland State University’s Northwest Economic Research Center (NERC).That, in turn, could be a first step in joining or linking to California’s existing cap-and-trade system and perhaps British Columbia’s revenue-neutral carbon tax, as well. The state and Canadian province, along with Washington, have already committed to regional carbon pricing under the Pacific Coast Action Plan on Climate and Energy (ClimateWire, Oct. 30).

The report, issued yesterday, found that a statewide carbon tax could levy a fee of $10 to $150 per ton of carbon dioxide with only a small drag on the economy and jobs, provided the generated funds were reinvested back into the economy.

“What we’ve continued to show is that putting a price on carbon will definitely reduce emissions and that a carefully crafted policy can achieve those reductions while ensuring that the economic impacts are minimal, or even slightly positive,” said NERC director Tom Potiowsky, who leads PSU’s Department of Economics.

“Oregon could create a powerful incentive for behavior change and becoming a leading economic force for developing solutions for a low-carbon world,” he added.

At a carbon price of $60 per ton, a tax could raise as much as $2.3 billion in revenue for Oregon and have a big impact on the state’s greenhouse gas emissions, mostly by influencing behavioral changes and encouraging efficiency, the report notes.

At a price of $150 per ton of carbon dioxide, a carbon tax would reduce economic output by just 0.7 percent and mean about 14,500 fewer jobs by the time the price reached its cap, according to the analysis’s revenue-neutral scenario.

The impact of such a proposal on industries that would bear the brunt of emissions cuts could be offset by tax reductions, the authors suggest.

The hypothetical tax would include emissions from both local emitters and imported electricity.

Few political headwinds in 2015

With the report completed, all signs appear to be green for Oregon to consider a state carbon price as it heads toward the 2015 legislative session.

Democratic victories in the November midterm elections left both chambers of the Legislature solidly in Democrats’ hands, with progressives holding a majority of seats in the Senate and a supermajority in the House.

Gov. John Kitzhaber (D), who was re-elected to his post in November, has made climate action a centerpiece of his agenda and is reported to be considering options on a statewide carbon price system. He was a signatory to the Pacific Coast Action Plan in October of last year.

And the report’s authors say a carbon tax — even at a lower price of about $30 per ton — would allow the state to meet its ambitious carbon reduction goals. Oregon has committed to reducing its greenhouse gas emissions by 75 percent below 1990s levels by 2050, and is expected to reach an emissions rate target 48 percent below 2005 levels by 2030 under U.S. EPA’s Clean Power Plan.

Washington, to the north, may have a more difficult time moving toward carbon pricing, although Gov. Jay Inslee (D) has promised to take the issue to the Legislature next year. The state came within one vote of joining California in the Western Climate Initiative’s cap-and-trade program in 2009, but now consists of a divided Legislature after Republicans took control of the Senate and picked up four House seats in November.