How Oregon plans to quit coal

The Oregon legislature has adopted a first-in-the-nation plan to phase out electricity from coal, a major source of climate-changing greenhouse gases.

The state's environmental community had been gearing up for a ballot initiative this year that would have forced the state's utilities to abandon coal as a fuel for electricity. But negotiations between the two groups resulted in a legislative compromise--dubbed the Clean Electricity and Coal Transition Plan--that will wean the state off coal-fired electricity no later than 2030 except for one out-of-state power plant that is partly owned by an Oregon-based utility. That plant will be retired no later than 2035.

The plan also calls for an increase in the percentage of energy that electric utilities must get from renewable sources such as wind and solar from 25 percent by 2025 to 50 percent by 2040.

Coal currently provides almost 34 percent of the state's electricity. Hydroelectric generation provides almost 43 percent. Natural gas and wind account for 13.5 percent and 5.6 percent, respectively. Regarding Oregon's renewable energy targets, for context California and New York have mandated the same percentage as Oregon but by 2030. Vermont has targeted 75 percent by 2032, and Hawaii has mandated 100 percent renewable energy for electricity by 2045.

Ontario became the first province in Canada to become coal-free in electricity generation as of 2014, a year earlier than anticipated when Ontario's premier pledged in 2002 to end all coal-fired power in the province. It was the first jurisdiction in North America to declare such a goal. Ontario's hydropower, the growth of renewable energy and the province's access to natural gas and nuclear power helped to make the transition from 25 percent coal-fired electricity to zero possible.

Oregon's Clean Electricity and Coal Transition Plan targets the state's two large investor-owned utilities, Pacific Power and Portland General Electric, which together provided 65 percent of all electricity to the state as of 2014 according to the Oregon Department of Energy.

Municipal utilities, cooperatives and public utility districts are not covered by the plan. These entities currently get a large portion of their electricity from the Bonneville Power Administration (BPA). BPA derives 83 percent of its power from federally-owned hydroelectric dams dotting the Northwest and 10 percent from nuclear power stations. BPA does not generate coal-fired electricity though a small portion of its purchased electricity may come from coal-fired plants.

The western power grid is too interconnected to keep every electron generated by coal out of Oregon. Occasional purchases of out-of-state electricity after 2035 may include some that is generated by coal, especially purchases made by those providers not covered by the plan. But Oregon ratepayers will no longer be on the hook for the financing of upgrades or new construction of coal-fired plants. That will make it harder for those generators serving western states to justify new investments in coal-fired facilities. In addition, rising requirements for renewable energy will shift demand away from coal, reducing investment in this source of electricity.

The opponents of the plan believe it will raise utility rates while failing to reduce carbon emissions. Supporters admit that rates will rise, but they believe rates will actually rise less if coal-fired electricity is eliminated from Oregon's energy mix. Greenhouse gas emissions will almost certainly be regulated ever more stringently over time, the supporters argue. Therefore, it is prudent to move away from carbon-intensive energy sources that are bound to become more expensive because of increasingly costly regulations.

Just in case, however, the plan allows for a temporary suspension of renewable energy targets if the cost of compliance exceeds a certain threshold for any one year or when other narrow conditions apply. Under the previous renewable energy targets, utilities never came close to exceeding the threshold.

As for reducing carbon emissions, it is possible that some out-of-state coal-fired generating plants that currently supply electricity to Oregon may continue to operate after 2035 by rerouting their electricity elsewhere. (Oregon has only one coal-fired power station within its borders, and that one is scheduled to close in 2020.)

But, Oregon's adoption of an aggressive target for renewable electricity generation necessarily implies a reduction in greenhouse gas emissions from what would otherwise have been the case. The Oregon Global Warming Commission estimates that emissions would be cut by nearly half for the Oregon customers of the state's two large investor-owned utilities covered by the plan. That assumes coal is replaced by a mix of 50 percent renewables and 50 percent natural-gas-fired electricity.

Moreover, the rest of the country will not simply stand still between now and 2030. It is likely that over time other states will adopt higher renewable energy targets. Some utilities may even choose to close coal-fired plants for economic reasons. That's because the cost of renewable energy has plummeted and in many cases is competitive with fossil fuel- and nuclear-generated electricity. The expectation is that renewable sources will continue to get cheaper to install and operate becoming ever more competitive. And, of course, renewable sources such as wind and solar do not face uncertainties over the cost of fuel. The wind and the sun are free.

As a result one long-standing criticism of renewable energy may no longer apply, namely that mandating increased use of renewable energy for electricity generation will be more costly in the long run than sticking with fossil fuel energy. What used to be labeled a competitive disadvantage may quickly be turning into a competitive advantage for those who move first to deploy low-carbon sources of electricity generation.

Major wind and solar companies already have operations in renewables-friendly Oregon. The rising requirement for electricity from renewables will only cement Oregon's reputation as a leader in renewable energy. That will make the state more likely to attract additional investment including investment in manufacturing that could increase the state's exports of wind and solar equipment to countries and states that are laggards.

The passage of the Clean Electricity and Coal Transition Plan may mark just the first step toward a more comprehensive approach to regulating carbon emissions in Oregon. In its recently ended one-month session, the state legislature considered but did not vote on a so-called cap-and-trade bill which would create a system similar to California's.

The Oregon bill would set a gradually declining limit on total carbon emissions in the state from large emitters and auction emissions permits to affected entities. Those entities which subsequently can reduce their emissions easily and cheaply would be free to sell their excess permits to those who have more difficulty. The bill or one similar to it is likely to be introduced in next year's full legislative session.

It is a sign of the times that the public debate among major players over Oregon's coal-free future saw little contention regarding the reality of climate change and focused mostly on the best way to address it. Given the rancor which has previously marked public exchanges about climate change in the United States, that's remarkable progress all by itself.

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P. S. Vermont and Rhode Island already enjoy coal-free electricity according the U.S. Energy Information Administration, but not because of any legal restraint. This has happened in part because much of the Northeast relies on readily available hydropower from Canada and rapidly expanding natural-gas-fired electricity generation made possible by cheap natural gas from newly exploited shale deposits in Pennsylvania.