Oregon’s $4 Billion Economic Opportunity From Ambitious Climate Policy

Oregon vaulted to the vanguard of United States climate policy when Governor Brown issued Executive Order (EO) 20-04 in March 2020, targeting at least 45% economy-wide emissions reductions by 2035, and at least 80% by 2050. But recent policies only put the state on course to reduce emissions 55% by 2050 – stronger climate policy is necessary to hit the state’s climate goals.

New Energy Innovation modeling outlines Oregon’s emissions reduction trajectory, as well as a more ambitious policy package that could put the state within reach of its climate goals and align it with the 1.5-degree Celsius pathway required for a safe climate future.

The economic upside is huge: Policies enacted since 2020 will add nearly 10,000 jobs and $2.5 billion to Oregon’s GDP in 2050, but enacting more ambitious climate policies on top of these would increase that number to more than 18,000 new jobs and $4 billion in state GDP in 2050.

In the two years since EO 20-04, Oregon has suffered some of the country’s most devastating climate change impacts, but it has also set one of the nation’s fastest timelines for cutting greenhouse gas (GHG) emissions in their power sector, among other significant climate actions.

As state policymakers consider their next steps to reduce planet-warming pollution coming from other high-emitting sectors like buildings and transportation, they can help mitigate climate impacts already hitting Oregon while kickstarting an economic boom.

Significant emissions cuts on tap from bold action in 2021

Oregon made significant progress in 2021 by passing a clean electricity standard requiring utilities to eliminate electricity-related GHG emissions by 2040, adopting the Clean Trucks Rule to accelerate zero-emissions truck sales, and approving a new emissions cap for covered natural gas and transportation fuels under the Climate Protection Program (CPP). If implemented, these historic policies could significantly cut Oregon’s emissions by 2050.

But more is needed to achieve Oregon’s GHG emissions goal of 80% reductions by 2050. New modeling using Energy Innovation’s Oregon Energy Policy Simulator (EPS), developed in collaboration with Power Oregon and the Green Energy Institute, estimates these recently enacted policies could cut Oregon’s GHG emissions 55% by 2050 relative to 1990 levels, but come up short of achieving the state’s emissions goal.

Fortunately, an additional set of smart policies to address remaining emissions could nearly achieve Oregon’s goal while aligning the state’s emissions with a 1.5°C pathway. These additional policies would add more than 8,000 jobs and $1.5 billion in state GDP in 2050 on top of policies passed in 2021.

Oregon will eliminate power sector emissions by 2040, but more is needed in other sectors

Prior to recent policies, Oregon’s 2050 GHG emissions excluding land use, as shown by the “Business as Usual” scenario, were projected to be 57 million metric tons (MMT). Under the “Current Policies” scenario, which reflects implementation of the 2021 measures, Oregon’s 2050 emissions are projected to be roughly 25 MMT, equivalent to a 55% reduction below 1990 levels.

Oregon’s clean electricity standard will reduce power sector emissions 100% by 2040 through 2050, compared to just a 36% reduction by 2050 without it, cutting state-wide GHG emissions more than 11 MMT annually by 2040.

The state is also a national leader in cutting emissions from heavy-duty vehicles like delivery trucks and 18-wheelers. Oregon was the first state to adopt California’s zero-emission truck rules requiring 40 to 75% of new medium- and heavy-duty trucks, vans, and buses sold in the state be zero-emission by 2035.

Our modeling finds this Clean Trucks Rule, combined with the expanded Clean Fuels Program which encourages lower carbon emission fuels compared to gasoline and diesel, will cut transportation sector emissions 15% in 2050. Most remaining transportation sector emissions come from passenger cars and additional policy is needed to accelerate electrification of these vehicles.

The CPP also takes an innovative approach to decarbonization through an emissions cap that will cut emissions by accelerating electrification and improving efficiency in Oregon’s top emitting sectors: transportation, buildings, and industry.

These policies will also improve the health of Oregonians, providing $3.1 billion in monetized health and climate benefits in 2050 by avoiding more than 600 asthma attacks and 40 premature deaths in 2050 alone, along with other health and environmental benefits. On a percentage basis, health improvements are greatest for people identifying as Black, Asian, or ‘other race,’ with the percentage reduction in premature deaths being 50-90% greater compared to people identifying as white.

A recent report from Renew Oregon shows the state’s Clean Fuels Program, 100% Clean Electricity legislation, and sweeping 2020 EO do the heavy lifting of expected emissions cuts. But much more must be done to address transportation, the state’s largest source of emissions, and emissions from buildings, the third-largest emitting sector. Stronger policies also create greater economic and health benefits for Oregon.

A set of policies to help close the gap in 2050

The Oregon EPS finds widespread benefits for the state’s economy, environment, and public health from implementing further policies to reach the 80% emissions reduction by 2050 goal.

The Nationally Determined Contribution Scenario (NDC Scenario), a deep decarbonization scenario consistent with the Biden administration’s U.S. NDC of 50 to 52% emissions reductions by 2030 relative to 2005 with a goal of net zero by 2050, outlines one policy pathway for Oregon to achieve greater reductions. The NDC Scenario applies national-level policies capable of achieving the U.S. NDC on top of current state policies, helping cut emissions further in the buildings, industry, and transportation sectors.

While the Oregon EPS’ NDC Scenario falls slightly short of Oregon’s 2050 target, the policy package comes close—reducing economy-wide emissions 50% in 2035 and 74% in 2050. By 2050, the largest remaining source of emissions in this scenario are in the agriculture sector, and additional agricultural policies could likely close the gap.

In transportation, an electric vehicle (EV) sales standard requiring all new passenger vehicles sold in Oregon be fully electric by 2035 is paired with an EV subsidy, supporting adoption of 100% EVs by 2035. These policies are complemented by new EV charging infrastructure investments, fuel efficiency standards, and promotion of public transport or non-motorized forms of transit, such as walking and biking, which further reduce emissions.

To cut building sector emissions, the NDC scenario includes improved efficiency standards in newly sold equipment like furnaces and water heaters, while also requiring that all newly sold building equipment after 2030 be electric. Heat pumps are several times more efficient than traditional furnaces and shift energy demand from fossil fuels to electricity, which will be zero carbon by 2040 as a result of Oregon’s clean electricity standard. The scenario also includes retrofits for 15% of the existing building stock by 2050, which helps consumers by improving insulation and lowering energy costs.

The key industrial sector policy is a standard requiring manufacturers use clean fuels like electricity or hydrogen. Deep industrial sector decarbonization requires significant capital investment and is unlikely without a mix of standards and incentives, making these policies vital for decarbonizing industry. Additional policies like regulations on methane leaks and venting cut industry sector emissions even further.

Agriculture accounts for a sizable portion of Oregon’s current and future GHG emissions and NDC scenario policies include livestock-related measures to reduce methane, along with cropland management practices like reduced soil tillage and improved fertilizer composition and application. However, the mitigation potential of these programs is limited today, and additional agricultural policies will be needed in the future to address emissions from the sector and meet the state’s GHG goals.

Finally, although the land use sector is not included in Oregon’s EO targets, the NDC Scenario also finds ample opportunity for additional carbon sequestration through natural lands, based on potential identified by the Oregon Global Warming Commission.

Greater ambition generates economic growth and health benefits

The NDC scenario increases Oregon’s GDP by almost $1.5 billion annually in 2050 on top of current policies, creating an additional 8,000 jobs statewide as new infrastructure is built, homes are retrofitted, and factories begin retooling for the clean economy.

This broader set of climate policies also improves public health due to reductions in harmful air pollution from burning fossil fuels. The Oregon EPS estimates that the NDC scenario policies would avoid an additional 20 premature deaths and 275 asthma attacks in 2050. The percentage reduction in premature deaths for people of all races significantly increases in the NDC Scenario compared to the Current Policies scenario, with people identifying as Black showing the largest improvement from an 8% reduction under current policies to more than 16% in 2050 in the NDC scenario.

Oregon is a U.S. climate leader with one of the nation’s fastest timelines for achieving clean electricity and strong policies to accelerate clean truck deployment and reduce natural gas consumption. However, the state cannot achieve its ambitious GHG reduction goals without additional policy action. With effective and equitable policy design, Oregon can continue its momentum leading the U.S. transition to a low-carbon future while securing extensive economic and health benefits for all its residents.

Energy Innovation Energy Data Analyst Shelley Wenzel contributed to this article.