Governor Kate Brown

​​​​Oregon Greenhouse Gas Initiative 

The Oregon Greenhouse Gas Initiative - SB 1530​​
Summary of Oregon Greenhouse Gas Initiative - SB 1530

FAQ  - Explaining the Cap-and-Trade

Cap-and-trade is a market based approach to reducing greenhouse gas emissions across multiple sectors in the economy. A cap-and-trade program sets a firm cap on emissions that declines gradually over many years to achieve specified greenhouse gas reduction goals. The state distributes a fixed quantity of emissions allowances each year. Each allowance permits an entity to produce 1 ton of emissions per year. Large emitters who are covered by the program either reduce emissions or acquire an emissions allowance. Emitters can acquire an allowance directly through auction, through trade with other entities, or in certain cases, they may receive allowances directly from the state.

Cap-and-trade creates a carbon market that incentivizes emissions reductions through innovation and investments in clean technologies. It imputes a carbon price on greenhouse gas emissions that encourages reductions to occur in the economy where they cost least. The total quantity of emissions across sectors is fixed by the cap, but market incentives determine how reductions are achieved. Cap-and-trade is widely viewed as an economically efficient and environmentally effective approach to addressing climate change.

As of 2018, seventy national and sub-national jurisdictions​ worldwide have either implemented or scheduled carbon pricing programs. Their combined emissions represent approximately 20% of global greenhouse gas emissions. This list includes ten U.S. states, Canada, Mexico, China, and Europe. The total value of the carbon priced under these initiatives exceeds $79 billion.

The first use of a cap-and-trade system was in the 1990s in the U.S. to address sulphur dioxide emissions responsible for acid rain. Today, nine Northeast and Mid-Atlantic states participate in the Regional Greenhouse Gas Initiative (RGGI), an emissions trading program to reduce greenhouse gas emissions in the power sector. Other states are now looking to join RGGI and RGGI states are exploring an extension of the program to include transportation emissions. California launched its cap-and-trade program in 2013 as part of the larger Western Climate Initiative. It covers emissions from transportation, industry, and the power sector.

Oregon measures GHG emissions primarily by receiving emissions data from the emissions sources via the GHG Reporting Program at the Department of Environmental Quality. That program collects emissions data from companies supplying fossil fuels such as gasoline, diesel and propane, electric and natural gas utilities, as well as large industrial emitters. Click here​ for more information about the GHG reporting program.

The figure below shows how Oregon's GHG emissions have changed since 1990. Most recent estimates for emissions in 2017 are around 65 million tons, compared to 56 million tons in 1990. Oregon's emissions did not rise gradually over this period, but rather rose sharply in the 1990s to a peak of 70 million tons in 2000. Emissions were roughly stagnant through the early 2000s, before declining with the onset of the national economic recession in 2008. Emissions have risen as Oregon's economy has rebounded in recent years. This rise is chiefly from emission increases in the transportation sector. For more information Oregon's GHG emissions see data collected​ by the Department of Environmental Quality and the most recent report from the Oregon Global Warming Commission.

Oregon's GHG emissions.png

Oregon has already implemented many programs aimed at transitioning to clean energy, including energy efficiency initiatives, a renewable portfolio standard, a low carbon fuels standard, electric vehicle incentives, and a mandate to eliminate coal from Oregon’s electricity mix by date-certain. None of these policies directly regulate greenhouse gas emissions. They do, however, contribute to emissions reduction through the transition to greater efficiency and cleaner energy technologies. These programs can complement a cap-and-trade program in Oregon, as they have in other jurisdictions, by reducing a covered entity’s reported emissions and its demand for allowances.​