Portland needs to act fast if it wants to achieve its goal of reaching net-zero carbon emissions by 2050. Though the city has several plans on the books to slash citywide greenhouse gas emissions, the Portland Clean Energy Community Benefits Fund (PCEF) is among the most promising—and well-funded—avenues for local climate action. And after a somewhat rocky start, PCEF now appears to be finding its footing—almost five years after 65% of Portland voters approved the fund as a ballot measure in 2018. 

Last fall, led by Portland Commissioner Carmen Rubio—who heads the Bureau of Planning and Sustainability (BPS), which houses PCEF—Portland City Council adopted legislative amendments to the fund. The amendments were intended to strengthen PCEF's accountability and refine its purpose, prompted by a blemishing 2022 audit of the program that revealed it wasn't on track to meet its goals. 

PCEF collects a 1% surcharge on local sales at large retailers to fund local energy decarbonization projects, specifically targeted to help residents most vulnerable to the impacts of climate change. Much of its funding is dedicated for doling out grants to local climate justice nonprofit organizations who will carry out PCEF's mission through community projects. 

Portland Clean Energy Fund

But dealing with so many nonprofits can get tricky, especially given the unexpected surplus money PCEF ended up with. The fund initially had a difficult time managing all its grant contracts. 

One nonprofit PCEF awarded $12 million to in 2022 was later revealed to have a history of financial impropriety, raising concerns about the program's grant review process. The fund ended up rescinding that grant, but the incident served as a wakeup call for how PCEF should move forward. 

Over the next five years, PCEF has $750 million to invest in decarbonization projects, and project leaders want to make sure they do it right. 

One of the key elements of the new—and hopefully improved—PCEF program is its Climate Investment Plan (CIP), which will guide PCEF's investments through the next five years in order to “achieve major carbon reductions in ways that benefit those most impacted by the climate crisis.” After nearly a year of community engagement to formulate the plan, PCEF committee members approved the first CIP on July 20, and plan to present it to City Council in September. 

In a time when rising global temperatures cause increasing devastation, both close to home and around the world, climate activists say PCEF's work is both vital and only a drop in the bucket of what needs to be done to combat the climate crisis. However, despite outstanding concerns that City Council will interfere in CIP implementation, PCEF leaders are optimistic about their ability to make a meaningful dent in making Portland a greener and more equitable city—and they acknowledge there is much more to be done.

Working through growing pains   

While many city programs are dealing with budget deficits and shortfalls, PCEF has had the opposite problem: the fund generated unexpectedly high revenues. Initial estimates expected PCEF to generate $44 to $61 million annually, but actual revenues were much higher—in 2020-21, the fund pulled in $116 million. The surprising windfall made budget management at PCEF more difficult, and also put increased scrutiny on the program to spend its money wisely.

Concerns about operations at PCEF reached a tipping point in March 2022, when a city audit found the fund was falling behind in its goals, flagging the program's oversight of nonprofit partner agencies and loosely-defined performance metrics. The audit recommended PCEF leaders "set timeframes to complete all elements of the legislation and make plans transparent." 

The audit said PCEF's focus on "capacity building" for grant recipients—allowing organizations to use fund money to increase staffing, training, and more—may divert money from carbon reduction projects. PCEF leaders defended the investment in capacity building, noting many of the nonprofits it worked with are new and small, and organizational funding may be necessary for them to implement projects down the line. 

The audit also pointed to problems with PCEF's administration funding cap, which had been set at 5 percent, limiting how much money PCEF could spend on staff to review grant and contract proposals. It also recommended the fund align itself more closely with the city's climate plans and better define its emissions reductions goals, necessitating stricter oversight of the nonprofits it partnered with. 

The legislative amendments City Council approved last fall addressed the audit's concerns, and a recent audit update says the program is now on the right track. Per the amendments, PCEF can now use 12 percent of tax revenues for administrative costs, allowing for adequate staffing. 

The audit update states PCEF is now on track to "further define capacity building," separating organizational capacity building into a distinct funding category in the CIP. And the CIP itself, which lays out how PCEF can align with city climate goals, will make it clear how proposed investments are "directly or indirectly supporting actions in the City’s Climate Emergency Workplan." 

Despite the problems, PCEF has seen success in its past grant cycles. Last summer, the fund doled out $107 million for 65 community-oriented clean energy projects — Portland’s largest-ever single climate justice investment. 

Grant recipients included Bikes for Humanity PDX, which received $20,000 to give 100 free bikes to Portlanders in need; Albina Vision Trust, which used a $1,700,000 grant to help break ground on the Albina One Affordable Housing development; and the Community Energy Project, which was given $10 million for “deep energy and electrification retrofits for frontline communities.” 

PCEF leaders hope the CIP will help the fund oversee further achievements in the next five years. 

The Climate Investment Plan 

PCEF committee members and leaders celebrated last week's approval of the inaugural CIP. They especially commended the fund for its community engagement work to inform development of the plan. Throughout the development of the CIP, PCEF hosted in-person and virtual workshops and listening sessions, receiving well over 500 public comments in the process. 

"There's been a deep and thoughtful public engagement process...this is not a plan that's come out of nowhere," said PCEF committee member Megan Horst at last week's meeting. "The public should know that [the CIP] hasn't come out of some backroom dealing." 

The plan details how PCEF will allocate three-quarters of a billion dollars between 2023 and 2028. The bulk of the money—$473 million—will be dedicated for energy efficiency and renewable energy projects. Another $129 million will be directed to transportation decarbonization, $71 million for green infrastructure like street tree planting, $42 million will go to climate jobs, workforce, and contractor development, and $20 million will go to regenerative agriculture projects. The fund earmarked $13 million for helping contracted nonprofits bolster staff and resources, and another $2 million for "other projects that reduce or sequester greenhouse gases." 

 CIP investments. (Portland Clean Energy Fund)

These goals will be funded through "community responsive" grants, strategic programs, and the tree canopy maintenance reserve, which funds targeted long-term maintenance of the city's tree canopy to "ensure the sequestration of carbon emissions in a manner that aligns with PCEF’s purpose." 

While specifics on outcomes of the grant funding have yet to be determined, the strategic programs funding pathway illustrates tangible programs that the CIP plans to implement over the next five years. Two such strategic programs were deemed especially important by City Council and have been fast-tracked: a $40 million investment in equitable tree canopy coverage and $60 million for renewable energy upgrades in affordable multifamily housing. Portland's Bureau of Planning and Sustainability is currently in the process of installing thousands of energy-efficient heat pumps and cooling units in multiunit dwellings with their PCEF-funded "Cooling Portland" program

Other programs in the final CIP include more than $200 million for clean energy improvements in single-family homes and small commercial buildings, helping individuals and businesses transition to sustainable energy to power their homes and workplaces. The CIP states that residential and commercial buildings account for more than 40 percent of Multnomah County's carbon emissions. 

Another big chunk of the county's greenhouse gas emissions come from transportation. While PCEF's programming has overlooked the climate impact of transportation in the past, the new CIP does not. The plan dedicates $20 million for a "comprehensive e-bike access and support" program, which will offer rebates to income-qualified households for new e-bike and cargo e-bikes from local bike retailers. The e-bike rebate is an exciting prospect to many Portlanders who have championed electric bike access after seeing the success of similar programs in cities like Denver.  

Another strategic plan dedicates $25 million to expanding the Portland Bureau of Transportation's (PBOT) Transportation Wallet program, "offering qualifying participants a package of free transportation options...that meet their individual needs with an emphasis on low-carbon transportation modes." 

Although Portland bureaus like PBOT are currently suffering from financial woes and could benefit from the additional financial support from PCEF, the fund's investment in PBOT projects isn't intended to backfill the bureau's draining budget, though that may end up being a byproduct of the financial support. 

"The current draft of the PCEF investments includes an allocation to PBOT for the Transportation Wallet and this may be a way to help pay for the program if we have to make our own cuts," PBOT Communications Director Hannah Schafer told the Mercury. "Our understanding is that PCEF does not want to be replacing programs, they want to be adding programs, but we will have to see what happens." 

What's next?

While PCEF committee members are excited about the CIP, some worry about what will happen when the proposal goes to City Council.

At last week's meeting, PCEF committee member Robin Wang stated concerns that City Council could make "backroom negotiations" and significantly change the CIP. 

"I'm concerned Council may [make changes] in their desire to get votes or support...that what we present to them and what they approve could be vastly different. I think that would be undoing the will of the people," Wang said. "I spent a tremendous amount of time putting all this together and I'm concerned that work will be in jeopardy." 

Wang's comments come after a Willamette Week article reported Commissioner Rene Gonzalez's interest in "tweaking" PCEF and other voter-approved ballot measures. It's unclear what elements he'd want to change, and why. Gonzalez's team didn't respond to the Mercury's requests for comment. Given the public reaction to the commissioner's recent attempts to overhaul major aspects of the charter reform measure, it seems likely any City Council plan to disrupt PCEF would also be met with significant backlash. 

PCEF leaders also acknowledge that, while a $750 million investment is a good start, Portland's clean energy transformation will require a lot more. 

"It's still a drop in the bucket in the grand scheme of the climate investments we need to make," PCEF Program Manager Sam Baraso told the Mercury in an interview. 

But Baraso said the plan will go a long way to ferment collaboration between the private sector, the government and nonprofits—which will have a big impact going into the future. 

"We really tried to elevate a plan that's tapping into each of these sectors to their best use," Baraso said. "We've got PBOT running the Transportation Wallet, let's expand on that. Let's tap into Urban Forestry. We've got the private sector, let's lean into their administrative capacities and bring out nonprofits to do what they do best. I think the essence of the plan is how we bring all those sectors together." 

Portland City Council will hold a PCEF work session on August 15. From there, more details of its implementation will be revealed.