Oregon's carbon tax bills contain lots of twists
By Lee van der Voo
Sen. Mark Hass backs the idea of a carbon tax for both its environmental and revenue virtues.
Oregon utilities and fuel suppliers could be paying a carbon tax on fossil fuels if one of two bills passes the Oregon Legislature by June.
The likelihood of either clearing that hurdle, however, is low. Instead, the bills have spurred a lively conversation about the potential for carbon tax in the state, paving the way for future proposals, and perhaps a future tax.
"My interest this session was to advance a conversation," said Rep. Jules Bailey, a Portland Democrat who introduced one of the two carbon tax bills in the Oregon House.
Bailey said he also wanted to get people talking about the relationship between regulation and market mechanics.
His proposal, House Bill 2792, would institute a carbon tax while repealing the state's renewable portfolio standard - the rule that requires utilities to generate 25 percent of power from renewable resources by 2025.
The proposed bill would also eliminate energy siting assessments paid to the Department of Energy and modify Oregon's gas tax downward by steering revenues to ODOE and the State Highway Fund, among others.
It illustrates how, if the state discouraged greenhouse gas emissions, markets for renewable energy generation could kick forward absent incentives and regulation.
It targets only fuel suppliers and utilities, who would be taxed on the amount of carbon-based fuel sold to consumers or used to produce electricity for consumers.
HB 2874, proposed by Democrat Rep. Phil Barnhart, of Central Linn and Lane counties, similarly targets fuel suppliers and utilities that sell or combust fossil fuel for consumer use, though the bill does not repeal or modify other programs. Both allow the rate of tax to be determined.
The bills were drafted weeks, if not months, before Portland State University's recent release of a report showing how carbon tax could also be a dependable revenue source for the state, lowering rates for corporate and personal income tax in Oregon.
Its authors at the Northwest Economic Research Center, who modeled their analysis after a similar tax instituted in British Columbia, also hosted British Columbia's Environment Minister Terry Lake for talks on the Oregon carbon tax idea. The report and related talks have combined with the Bailey bill to demonstrate how carbon tax can offset other taxes, as well as incentivize markets for green energy and deregulate related incentive programs.
Bailey said the PSU report provides a "framework going forward, if not a blueprint." He added that both the proposed bill and the report have helped people see the carbon tax conversation in a different light.
Those intrigued by the idea include Sen. Mark Hass, a Southwest Portland and Washington County Democrat.
"I'm fascinated by the potential of offsetting income taxes with a carbon tax," he said via email. "But for me, the fascination goes beyond ecological benefits. We have the most volatile tax code in the country, driven by our over-reliance on the income tax.
"And it's in these bad times that Oregon has a train wreck. So, while I support more study of a carbon tax, I also support looking (at) how it gets us to the overall goal, which is to reform Oregon's tax code."
A third bill in the senate, one that asks the Oregon Department of Energy to study a potential carbon tax further, is likely to pass.
The Oregon Petroleum Association and utility operators contacted for this story didn't respond by press time.
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