SB 80 (Cap and Trade) Hearing

SB 80 (Cap and Trade) Hearing

Testimony by Governor Ted Kulongoski - as prepared for delivery

Chair Dingfelder and Chair Cannon, members of the committees, thank you for the opportunity to testify before you about the climate change legislation I introduced before your respective committees, including SB80

I will be brief, as my policy advisor, Dave Van't Hof, and DEQ Director Pederson and his staff will walk you through the proposed legislation in more detail.

I will begin my remarks by repeating what I said on October 27, 2008, when I released my climate change agenda for the legislative session. "Climate change is the most important environmental and economic issue of our time."

The unregulated - and unmitigated - emission of CO2 and other greenhouse gases into the atmosphere is changing our climate, threatening our ecology, keeping us dependent on foreign sources of energy, and - if nothing is done - is a missed opportunity to reinvent our national and state economies.

When I took office in 2003, some were still questioning whether climate change was real. But that issue - including whether human activity plays a part - is settled.

The consequences of climate change are evident. Not just across this state - but globally.

We're seeing increased temperatures, decreased snowpack, diminishing water supplies, more unpredictable weather patterns, increased risk of forest fires and volatile energy prices - all of which are playing havoc with our environment and economy.

So this issue cannot go unaddressed. Oregonians want action. Not delay. They want new thinking - not business as usual. They want long-term solutions - not short-term political band-aids.

We no longer have the luxury of taking a short-term view of the climate change issue. We must take a long-term view that looks 10, 20, and even 50 years into the future - to where Oregon once again rewrites the rulebook on protecting the environment and our quality of life,…

…and at the same time makes those policies and investment decisions that will nourish and grow a green economy.

For the past six years, I have worked hard to shift Oregon's economy away from fossil fuels and toward the emerging clean-energy economy. As you have all heard me say on many occasions, it is the right thing to do for Oregon's environmental and economic future.

And during this time, Oregon has provided leadership to the nation, at a time when there was precious little leadership coming out of Washington D.C., to combat global warming.

From adopting clean tailpipe standards, to the RPS and renewable fuels standards passed in the 2007 session, to ranking among the nation's leaders in energy-efficiency investment, to passing the country's most aggressive greenhouse gas reduction goals, we have made significant progress.

But so much more needs to be done, because, as a later witness today will testify, the cost of inaction will be disastrous for Oregon's economy and make it even more difficult to create the jobs and revenues that a 21st century government needs to serve its citizens. And these costs, unlike our current temporary economic recession, will last for decades and will have devastating effects on our forests, our coastal communities, our snowpack and water supplies, and our public health.

Because of that, I firmly believe that this legislature will be remembered years from now, more for how it responded to the urgent need to adopt effective policies to combat global warming - and - whether it took a stand and made transformative policy choices to transition to a clean energy economy - than it will be for its efforts to navigate our current recession and make painful budget decisions.

But how can a small state like Oregon make a difference in this global warming crisis? For starters, we can position our state to be a winner in the new energy economy that already is emerging.

Due to the policies I previously mentioned, as well as having one of the most innovative private sectors in the world on green technology, Oregon stands to reap much greater rewards than our size would indicate by acting early and staying ahead of the national curve.

We also can leverage our policies by acting in concert with others, as we did with the clean tailpipe standards, which will revolutionize the vehicle choices coming from Detroit and other automobile manufacturers. And we are positioned to do the same again by joining a regional cap and trade program that currently comprises 80 percent of the Canadian economy and 20 percent of the US economy.

So what should we do? The core goal of my package of climate change legislation, including SB 80, is to put Oregon on a clear pathway to achieve the aggressive greenhouse gas reduction goals put into statute in 2007 and to create tremendous new economic opportunities in doing so.

Based in large part on months of stakeholder-led meetings over the past year, I have proposed a package of measures that will help us achieve our emission-reduction goals and at the same time grow the Oregon economy by increasing investment in energy efficiency and renewable energy, by enacting innovative strategies for reducing emissions in residential and commercial buildings, by creating green transportation options, and by increasing agency authority to regulate greenhouse gas emissions.

As you know, SB 80, in addition to authorizing the creation of a mandatory cap, would create authority for Oregon to participate in a regional carbon trading program as another significant tool for reducing emissions at the least cost possible.

Over the last year I have -like you--been listening to those still in denial who argue that SB 80 is not the right approach to address the issues around CO2 emissions.

Their answer to the climate change debate has been to promote fear and confusion about what SB 80 and the other bills would actually do. They argue against a cap and trade and other parts of this proposed package by claiming now is not the time to make significant changes with a fragile economy, or let the federal government deal with this issue, or, even more ominously, that cap and trade is this "big thing" that is scary, unknown, complex, and risky.

You may recall that the same coalition of Salem Beltway naysayers made similar arguments about the Renewable Portfolio Standard bill in the 2007 session. Despite economic data that supported the benefits of an RPS, they predicted rising energy rates and economic costs that have not materialized. In reality, two years later, our utilities are reporting they are ahead of the required timeline for integrating renewable energy with no increase to rates over what would have occurred with fossil fuel options.

Let me assure you that I do not and will not support moving ahead with a climate change policy that would inhibit our ability to create a robust job-growth economy. But as you will hear later, the good news is that preliminary economic analysis by Eco Northwest projects that Oregon's participation in a cap and trade program, and aggressive investment in energy efficiency and conservation, would actually GROW our economy and create tens of thousands of new jobs. Cap and trade is NOT a negative for our economy but a positive.

And as I mentioned previously, you also will hear today about new economic analysis that projects the cost of inaction in reducing greenhouse gas emissions would cost the Oregon economy billions of dollars. Some will continue to call for delay, but these reports are compelling pieces of economic information that call for action now.

And even for those who discount or ignore the economic information, I would ask "what is it that is so scary about SB 80?"

The bill creates a public process that engages our citizens and business community in gathering information, and debating the accuracy and meaning of that information, before any decisions are made about creating a cap and trade system.

In short, the bill is about involving and educating our citizens about the difficult choices that we must make to mitigate the climate change crisis. Surely, we are not afraid of involving the public in gathering the facts and information necessary to having a dialogue about how we reduce our carbon emissions?

This proposal is pragmatic, thoughtful, and strategic - and is far from rushed. For close to two years, my staff, state agencies, and stakeholders from around Oregon have been engaged in a dialogue to develop the building blocks for a regional cap and trade program.

Under the legislation, there would be an additional two years of public process in developing the details of the cap and trade program. Those details would be reviewed by this legislature in 2011 and, if not altered, would take effect in 2012.

During this time, we also would have several years to evaluate the performance of existing cap and trade programs in Europe and on our East Coast to learn from them, and to make sure they do not lead to market failures and the sorts of dire predictions being touted by naysayers.

There is a lot of work that must go into designing Oregon's participation in a successful cap and trade program. If we wait, it will be too late. We must start the data collection and public process of designing a program that is unique to Oregon but fits within a regional framework and even a national one.

If there is a national cap and trade program in the next few years, I would argue that SB 80 is a necessary and valuable tool if Oregon and the Oregon business community want to have an effective voice in working with Congress to take into account the specific needs and concerns of Oregon when writing national legislation.
The information and data gathered under SB 80 would be invaluable in those discussions.

In the end I will admit, there is nothing magic about a trading program. I, along with many of the leading economists around the world, believe that a trading program is an effective tool in minimizing the costs of transitioning to a low-carbon future.

But I also am a strong believer in the legislative process. I am open to improvements or modifications to SB 80, so long as it does not result in further delays and those amendments continue to further our ultimate goal of setting a mandatory cap on carbon emissions and, at the same time, create a process for Oregon to achieve its long-term reduction goals.

The good news is that virtually everyone in this room claims they agree that Oregon must establish a mandatory cap and develop policies to achieve greenhouse gas reductions. I welcome that as a starting point.

But it is time for those who oppose a cap and trade program to provide workable alternatives as to what they would propose to meet our goals of reducing CO2 emissions. I mean proposals that will not be mere window-dressing, and are designed to delay our progress but are equally effective tools in achieving the state's reduction goals.

To be against something is easy. To see the future and act requires courage and vision.

As I said on the opening day of session in my State of the State address: "There is a green revolution stirring in America, and Oregon is the beating heart of that revolution. But it won't be for long if we call a timeout on our move toward investing in renewable energy and green technology."

I ask you to show that courage and vision and move forward to make SB 80 the tool that will grow our economy, create thousands of new family wage jobs, and protect our quality of life.

Thank you.

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