This February, one of Oregon Democrats’ key goals will be passing a new cap-and-trade policy aimed at reducing private industries’ carbon emissions. But as the details of that policy come into focus, a division between the state’s environmental groups is raising questions about whether policymakers and advocates are betting on the most effective climate policy.

Under a cap-and-trade framework, which is already employed in California and is being pushed in several other parts of the US, the state government places a limit on how much carbon large corporations can emit into the atmosphere each year. The framework also establishes a marketplace of credits, or “allowances,” that companies can purchase in order to emit more carbon than their designated limit.

This year’s session won’t be state lawmakers’ first stab at passing cap-and-trade legislation. Oregon Democrats have been working on cap-and-trade policy since at least 2016, and came nail-bitingly close to passing it last year in the form of House Bill 2020—until state Republicans, citing worries that the bill would affect the timber industry, fled the state to avoid voting on it and effectively killed the bill.

But now Senate Democrats, led by Senate President Peter Courtney, are prepared to commit to a new cap-and-trade bill that’s similar to HB2020—and one that, in an effort to win bipartisan support, gives more allowances to private industries. For example, under the proposed bill, industrial companies would only have to count the carbon emitted under their own manufacturing processes, rather than also including the carbon impact resulting from the creation of the fuel they purchase and use, as HB2020 would have required. And that’s not the only concession to carbon-intensive businesses: Many of the new bill’s requirements wouldn’t go into full effect until as late as 2030, around the same time a United Nations report warns climate change could reach a “point of no return.”

Oregon environmental groups are hesitant to embrace the new bill. Some organizations, like Renew Oregon, helped craft HB2020. Renew Oregon generally supports cap-and-trade policy—but reject lawmakers’ attempts to soften HB2020’s framework.

“We may walk away from the new bill,” says Shilpa Joshi, coalition director at Renew Oregon. “We’re perfectly fine with doing that.”

Joshi says the current draft of the new bill concedes too much to corporate interests in order to win Republican support.

“There are many criticisms of cap-and-trade. But it comes down to: It’s not effective at doing the thing it says that it’s supposed to do.”

Other environmental groups oppose cap-and-trade legislation altogether. Those groups, like OPAL Environmental Justice Oregon, point to the failures of the cap-and-trade program in California, the first state to start such a program back in 2013. A 2019 investigation by ProPublica found that carbon emissions from California’s gas and oil industry rose by 3.5 percent since cap-and-trade began. ProPublica’s analysis concluded that market-based climate programs too often provide loopholes for the industries that need to be regulated the most—and added that cap-and-trade was pushed in California at the expense of potentially more meaningful climate solutions, such as an aggressive carbon tax.

It’s for these reasons that OPAL chose not to support HB2020 last year.

“There are many criticisms of cap-and-trade,” says Shawn Fleek, a spokesperson for OPAL. “But it comes down to: It’s not effective at doing the thing it says that it’s supposed to do.”

Both HB2020 and the new cap-and-trade bill—currently dubbed Legislative Concept 19, as it is being drafted—include carbon offsets. That makes the legislation particularly problematic, according to Daphne Wysham, director of the Climate Justice Program at Portland think tank Center for Sustainable Economy (CSE). Wysham has been studying offsets—in which companies are allowed to emit more carbon in one area in exchange for investing in carbon reduction projects elsewhere—since the late 1990s. She says offsets have “incentivized the market and profit over concrete results.”

Wysham offers corporate animal feed operations, also know as factory farms, as an example. Livestock account for about at least 15 percent of worldwide carbon emissions, and factory farms are the most environmentally destructive of livestock operations, making factory farms “inherently unsustainable.” But under a cap-and-trade program that uses offsets, factory farms would be given an incentive to continue expanding: They could capture yet more methane from their large manure ponds, burn it, transforming methane into electricity, releasing the less potent global warming gas, carbon-dioxide, and sell the difference between the two gases as carbon credits.

"This is what we call a 'perverse' incentive," says Wysham, "because it encourages the very activity that is causing the most environmental damage—in this case, factory farms, when we should be doing the opposite, penalizing activity that results in increased greenhouse gas emissions and rewarding activity that enhances carbon drawdown.

"In addition," Wysham adds, "offsets are impossible to verify, because they essentially require sellers and buyers to prove a counterfactual. In this example, the farmer can't prove he wouldn't have captured the methane from the waste pond without the carbon offset credit, so we don't know if those emissions reductions are meaningful."

Rep. Karin Power, who represents Milwaukie in the state legislature, was one of HB 2020’s champions, shepherding the bill through an intense policy debate on the House floor. She says she understands why groups like OPAL and CSE opposed the bill—but that she saw it as the beginning of a wave of climate legislation, not a standalone solution.

"Compared to what Oregon has had, we believe the benefits of the bill outweighed the places where it fell short.”

“Really, a cap-and-trade program serves as a backstop for everything else business and government should be doing to reduce emissions,” Power says. “It doesn’t foreclose a number of different policies that we should be looking at, sector by sector.”

Pablo Alvarez, a climate organizer for the Eugene-Springfield chapter of the NAACP, also saw HB 2020 as an imperfect but solid starting place. Alvarez was disappointed the bill didn’t set more aggressive goals for carbon emissions reduction, but he chose to support it because it also provided funding for investment in sustainable job training and infrastructure for the Oregon communities most impacted by pollution and climate change—communities that are often disproportionately low-income and populated by people of color.

“Compared to what Oregon has had,” Alvarez says, “we believe the benefits of the bill outweighed the places where it fell short.”

But Alvarez says his support is not guaranteed for the new bill, sharing Joshi’s concerns about it being watered down to appeal to Republicans.

Over the next month, lawmakers, policy experts, and environmental advocates will, through a series of drafts and public hearings, work to shape the bill into something that satisfies as many people as possible. Because the new bill is originating in the Senate, Power and the rest of the Oregon House won’t have a chance to vote on it until the Senate passes it in February or early March.

“We’ll take what the Senate has landed on,” Power says, “and see if that’s the very best that Oregon can do.”

This story has been edited to correct and clarify information about carbon offsets.