What is the goal of the policy proposal?
The goal of the Clean Air, Healthy Climate proposal is to accelerate Portland’s climate action to reduce pollution in Portland that will improve the health of our residents and reduce the risks to our economy from climate change and the high costs of pollution.
Entities covered by this proposal will have the option to reduce pollution on their work sites to pay less or pay the proposed fees that will empower the City of Portland to scale up programs to reduce climate and air pollution directly.
Companies can reduce their fees by reducing emissions from their facilities. This can be achieved through any number of means, including shifting from fossil energy and fuels to renewable energy or renewable natural gas, industrial process, and energy efficiency investments, changing materials to non-toxic sources and/or air pollution controls.
How much money will this raise and what will it support?
Both proposals combined are estimated to raise approximately $11 million annually but will go down as emissions decrease. The new revenue will support community-wide investments in projects and programs that reduce greenhouse gas emissions from homes, apartments, commercial buildings, and the transportation sector. These investments will increase community resilience to the impacts of climate change. The revenue will also expand community engagement and capacity building support for community organizations to engage with the City to develop specific climate actions. In addition, the revenue from the Clean Air Protection Fee will be used to improve the health and wellbeing of Portlanders most at risk from exposure to air pollution and to address environmental injustices.
What are the outcomes and benefits that Portlanders will see because of these policies?
Outcomes from the investment of these funds include:
- Reduced greenhouse gas emissions from transportation, buildings, and energy systems and improved livability and quality of life for all Portlanders, especially BIPOC residents. This includes stronger building performance standards that will increase energy savings and lower costs for residents and businesses; investments and policy incentives to support electrification of cars and freight, and multi-modal transportation options.
- Increased community health and resilience, including increasing tree canopy in East Portland.
- Reduced air pollution and improvement in public health, especially for BIPOC and low-income residents, who are often the most vulnerable to air pollution impacts.
- Community organizations supported to engage with the City of Portland on climate and air quality action in a sustained and ongoing way.
How off track is Portland from meeting its carbon reduction and air quality targets? How will this proposal help?
Unanimously approved by Portland City Council in June 2020, Portland’s Climate Emergency Declaration set a new goal to reduce local carbon emissions by at least 50% below 1990 levels by 2030. Emissions are currently 19% below 1990 levels. The direction established in the Climate Emergency Declaration calls for “greater action, resources, and collaboration that prioritizes frontline communities to restore a safe climate.” To achieve the adopted target, the City of Portland needs to accelerate the actions to reduce emissions across sectors in ways that prioritize benefits for frontline communities.
While the City has been addressing the State’s health-based air pollution benchmarks within Portland through programs like the Clean Air Construction Program and Smart City PDX, there has never been dedicated funding or staff resources to support comprehensive air quality work. Portlanders breathe the dirtiest air in the state and face the highest risk of pollution-related cancer. To take bolder steps to protect health by reducing air pollution, the City needs dedicated and ongoing resources.
How is this proposal different from the Portland Clean Energy Fund (PCEF)?
The Portland Clean Energy Community Benefits Fund (PCEF)—approved by voters in 2018—serves a different purpose but is complementary. The companies that may to pay for their pollution emissions are different from the companies that pay the Clean Energy Surcharge for PCEF. The Clean Energy Surcharge applies to large retailers with annual tax-year total gross revenue from retail sales of $1 billion or more in the U.S. and $500,000 or more within the City of Portland. PCEF dollars are earmarked in a special revenue fund to help community organizations advance projects that meet community priorities and support Portland’s transition to a clean energy future. Those dollars are not available to City bureaus for climate-related programs or projects.
The revenue generated by the Clean Air, Healthy Climate proposal will support the goals of the PCEF program by allowing City bureaus to implement the City’s share of carbon reduction work outlined in multiple policies adopted by Portland City Council, including the 2015 Climate Action Plan, the 100% Renewable Energy Resolution (2017), and the Climate Emergency Declaration (2020).
What would be the impact of this proposal on covered entities?
The proposed fees would be collected beginning in spring 2022, which allows time for businesses to plan for emission reductions and prepare for this cost of doing business. Due to the pandemic, the four hospitals on the list would begin paying fees one year later, in spring 2023.
More than half of the companies impacted (46 companies) would pay $25,000 or less a year. The fee is not set at a level meant to internalize the social costs of carbon imposed on the community (which is closer to $117/per ton or more). The healthy climate fee is proposed at $25/per ton.
Placing a value on emissions will send a signal to businesses to start prioritizing investments in energy efficiency and decarbonization strategies to reduce pollution levels. Without this pricing signal, these investments and changes are often not prioritized.
The City recognizes that this proposal adds cost for covered entities. Most business leaders agree that we are facing a climate crisis. The longer we wait, the capital investments will be more costly. Investing in the transition to a clean economy will create good jobs and will strengthen our local economy. Many of those jobs are in the construction and manufacturing services sectors.
Are all businesses in Portland covered by this proposal?
No. This proposal applies to less than 1% of all businesses in Portland. For example, it does not cover small businesses, such as restaurants or mom and pop operations. The proposed Clean Air and Healthy Climate fees ask that the largest pollution emitters in Portland shoulder some of the societal costs to reduce carbon and air pollution that harms so many Portlanders. The covered entities in this proposal are the largest emitters of site-based emissions located within Portland city limits who currently register with the Oregon Department of Environmental Quality (DEQ) for their greenhouse gas emissions and/or have an air contaminant discharge permit. For 2019, this is a total of 81 facilities. Covered entities can reduce the cost impact by reducing their pollution levels since the cost is commensurate with pollution levels.
Are any Minority or Women-owned firms covered?
No, none of the entities are minority- or women- owned firms.
Which entities are impacted the most by this proposal? What is the average fee that covered entities will have to pay?
The covered entities, based on 2019 publicly available data, are shown on the Healthy Climate map.
The following table shows the average annual fee based on the type of Oregon Department of Environmental Quality (DEQ) permits held by covered entities:
Given COVID-19, is this the right time to pass a new fee on entities that provide healthcare?
Given the global pandemic and the important role the health care industry is playing, the four hospitals covered by this proposal would have one additional year to comply. These hospitals would be required to pay beginning in April 2023.
The pandemic has demonstrated the heightened risk of Covid-19 for people who are exposed to air pollution. Delaying action on curbing pollution that harms human and community health is a risk to human health, especially for vulnerable populations.
Shouldn’t public agencies, like Portland Bureau of Environmental Services, the Port of Portland, or local universities be exempt?
Public agencies contribute to climate change and are as responsible for reducing their own emissions as private sector entities. As public agencies, we have an obligation and responsibility to support reaching Portland’s climate and air quality goals. The City believes it is not appropriate to require some polluters to pay, but exempt others. All large emitters should take responsibility and be expected to pay their fair share based on their level of pollution and are encouraged to pollute less.
Is it fair for these covered entities to pay both a State permit fee and a City of Portland fee?
Yes, because the purpose of the costs to covered entities are entirely different. The Oregon Department of Environmental Quality (DEQ) permit fees are based on cost recovery for DEQ to implement their office’s statewide air quality permit programs.
The focus of Portland’s Clean Air Healthy Climate proposal is emissions and pollution that are generated and emitted in Portland. The covered entities are in Portland city limits and the policies and programs from the fees would be focused in Portland. Today, Portland residents bear the burden of these societal costs to public health. This proposal would ensure that the largest emitters take some responsibility for those public health impacts.
How does this proposal interact with the Cap and Reduce climate program being implemented by the State of Oregon?
This proposal is not duplicative of the State Cap and Reduce program but is complementary and will work in tandem. The State’s program will establish a cap and a reduction requirement for covered entities but does not include a pricing mechanism. As the State’s program is implemented, it will reduce pollution levels for these covered entities, while also reducing their liability to the City of Portland. Portland strongly supports the State’s efforts to develop a Cap and Reduce program to cut emissions. At the same time, it is critical that Portland meet local reduction goals and address localized pollution problems.
Is there a risk that these businesses may relocate away from Portland because of these proposed fees?
With regards to the potential impacts to companies, our stakeholder engagement process has been to engage on concerns like this and we will address through this process. Given that over 50% of the covered entities would pay $25,000 or less a year, and 66% of the covered entities would pay less than $100,000 a year, this proposal is not expected to result in companies relocating.
Why is the City introducing this program now?
We are facing a climate crisis, falling behind in meeting our reduction targets, and the public health impacts from exposure to air pollution are more significant with COVID-19. This proposal provides the resources to match the accelerated action required by the City of Portland’s Climate Emergency Declaration (June 2020) to achieve greater than a 50% reduction in emissions in the next 9 years and to reach net zero by 2050 or sooner. Any delay in implementing this proposal would postpone the action the City must take to scale up climate action in the face of climate change. As Portland City Council unanimously deemed human-caused climate change as an emergency, the City needs to resource this work with the same level of urgency.
Why target the industrial sector, which have reduced emissions by 50%, the most of any sector?
This proposal targets the largest point sources of greenhouse gas emissions and air pollution, which include industrial sources, but also hospitals, schools, wastewater treatment and landfills, among others. The Healthy Climate Fee only applies to 35 of the largest emissions sources, which accounts for about 40% of industrial sector greenhouse gas emissions. The Healthy Climate Fee proposal is a market-based mechanism to internalize the costs of climate change for the largest sources of local emissions, creating an incentive, for the first time, for these companies to invest in decarbonization.
The industrial sector has reduced emissions since 1990 at greater rates than other sectors like transportation and buildings, but that is also misleading. The primary difference between the sectors can be seen in growth—we’ve added 39% more residents—pressuring residential and transportation sector emissions upwards. Similarly, we’ve added 36% more commercial sector jobs, increasing commercial and transportation sector emissions. By contrast, the industrial sector has not grown, remaining relatively flat since 1990, while benefiting from the same communitywide changes in energy efficiency and decarbonization.
Covered entities have complained that they haven’t been a part of the process for developing these policy proposals. Is that the case?
BPS worked internally with the Revenue Division and City Attorney’s to draft a proposal that would be legal and administrable, then reached out to all covered entities to share a draft and solicit input about the Clean Air, Healthy Climate proposal. There was a 7-week public comment period where over 350 stakeholders submitted comments. During that time, City officials also had meetings and conversations with over 70 stakeholders, including many of the covered entities, to hear their input. The City is now reviewing that public input to determine how to modify the proposals.
Will the adoption of these policies force the Owens-Brockway glass recycling plant to close and negatively impact Oregon’s Bottle Bill?
Our ongoing stakeholder engagement was designed to help the City better understand and address potential consequences like the one raised by Owens-Brockway. The City of Portland remains fully committed to maximizing recycling recovery rates and will continue to champion the Bottle Bill. Ensuring glass recycling continues should not come at the cost of health impacts to our communities and we believe we can advance our climate work and continue to have a world class recycling program. We anticipate a final proposal that reflects these commitments.
Under whose direction is BPS working to develop these policies?
City Council and our new Commissioner-in-Charge, Carmen Rubio, direct the work of BPS.