Kitzhaber’s new 10-year energy plan draft floats big green ideas to reactivate green energy 

For all the green energy sound and fury of the past decade – Oregon’s headlong recruitment of wind and solar companies, its controversial tax breaks, its aggressive mandates for renewable power – change to the overall supply of electricity has been painfully slow to come.

Sure, the Columbia Plateau is now draped in wind turbines. But they still supply only 3 percent of Oregon’s electricity. Solar and geothermal are mere blips. And though existing hydro is a big contributor, fossil fuel plants are still the workhorses, kicking in half the state’s electricity.

Meanwhile, Oregon is making scant progress on greenhouse gas reduction goals.

Enter Gov. John Kitzhaber, with a much-anticipated 10-year energy action plan. His policy vision, vetted by the state’s leading energy wonks, will debut in the next few weeks. It features a laundry list of initiatives to take renewables, efficiency and green transportation from the marginal to the mainstream, all in the name of lower greenhouse gases, energy security and jobs.

It’s a tough time for ambitious plans. The state’s renewable energy cluster is losing power, with solar and wind industries cutting jobs. The budget is in shambles, with little money for incentives such as the hefty tax breaks that helped bankroll the first boom. And ratepayers face an unbroken string of increases for environmental upgrades to existing plants, transmission expansions and the addition of renewable power.

Yet Kitzhaber’s advisers say energy policy, like education and health care reform, is one of the three big levers he can pull to make Oregon a better place to live. Advisers promise many initiatives will be low- or no-cost and will mesh with neighboring states’ policies, as well as re-established regional energy planning forums.

Michael Jung, who worked as an energy adviser to former Ohio Gov. Ted Strickland, was tapped to lead Kitzhaber’s effort. He says Oregon has come up with energy plans before, but those efforts were piecemeal, underfunded and largely ended up gathering dust.

This time, the focus is on action. To that end, three dozen industry insiders and environmentalists were picked last fall to brainstorm energy, from transportation to transmission. Their mission: big, transformative ideas.

Though their free-form efforts have been veiled in some secrecy, The Oregonian reviewed early draft plans submitted by four design teams. Those concepts are being winnowed by a governance committee, which will soon deliver a plan for public comment. Ideas that survive will be implemented by administrative order or regulatory change or introduced in the 2013 Legislature.

Until then, some ideas floated in the draft plan:

BIG IDEA: Carbon tax, anyone?
Carbon dioxide reduction is a keystone of Kitzhaber’s vision. Regulation is assumed inevitable, and Oregon would be better off getting a head start on tracking emissions and designing a “legal structure for carbon reduction,” aka a carbon tax.

Here we go again.

PAST EFFORTS: Lobbied heavily by utilities and businesses, the Legislature abandoned a 2009 bill for a regional “cap and trade” system. Efforts by environmental groups to put teeth in the state’s greenhouse gas reduction goals have also met with mixed success.

The prevailing viewpoint was that regional carbon regulation would be expensive, ineffective and put Oregon businesses at a competitive disadvantage with other states. Utilities made the case that national and international carbon regulation would work better, though those efforts subsequently flopped.

STRATEGIES: A detailed analysis of the least-cost carbon-reduction options, whether in the power, transportation or industrial sectors.

Jung recently told a gathering at the Energy Trust of Oregon the state needs to audit its entire tax code to see how it might be used as a carbon-reduction mechanism.

Replace utilities’ income tax with a carbon tax. That could be revenue-neutral to start, and give the Department of Revenue experience in tracking emissions.

BLOWBACK: Look for utilities to lobby against this idea if it survives. They still say a regional system is a bad idea.

BIG IDEA: Practically renewable
For the next generation of energy, require the cleanest practical mix of resources.

As utilities look to replace aging coal plants and expiring hydroelectric contracts, the natural choice is natural gas. The plants cycle up and down at a moment’s notice to meet demand. And thanks to plentiful shale gas and a listless economy, gas is cheap, cheap, cheap.

Environmentalists, on the other hand, want renewables. But they’re expensive without subsidies or the assumption that fossil fuel plants will face a large carbon tax. More reliance on intermittent resources also poses reliability problems.

REALITY CHECK: A simple gas-for-coal swap won’t meet Oregon’s environmental goals. Gas is a big carbon producer itself and subject to price swings, while renewables are carbon- and fuel-cost free.

Though Oregon’s utilities are required to meet 25 percent of their retail demand with renewables by 2025, the plan will call for further incentives for in-state development of wind, wave, solar, biomass and geothermal energy.

STRATEGIES: Look for an emphasis on long-range solutions: energy storage and smart grid technologies to accommodate renewables and manage customer demand automatically; small distributed generation resources close to big energy users; and incentives to push renewable development toward areas with good energy resources and low conflicts.

BIG IDEA: Conserve and prosper
Energy efficiency is already the go-to resource for Oregon utilities. It’s cheap, clean and avoids fuel-price risk. Utilities are supposed to acquire all cost-effective energy efficiency before investing in anything else.

STRATEGIES: Scale up existing programs to capture more, deeper and harder-to-reach energy savings – in low-income, public, rental and small commercial spaces. A key piece of that will be unlocking private financing for energy efficiency.

» Oregon’s definition of cost effective may be too restrictive, encouraging “cream skimming” of easy measures with the fastest payback, while ignoring deeper, more expensive retrofits that are harder to justify. The state should package measures to make deeper retrofits more economical and form long-term relationships with building owners to encourage ongoing investments.
» Restructure rates so utilities have an economic incentive to save more energy rather than sell more.
» Push more widespread adoption of rate mechanisms that encourage customers to cut back, such as time-of-day based pricing.

BONUS: Energy efficiency is labor intensive, and the jobs stay here. Recommendations include targeted recruiting, incentives and workforce development; also tax credits for manufacturers of insulation and lighting, for energy efficiency service companies and for lenders supporting energy efficiency.

BIG IDEA: Streamline permitting
Energy developers complain loudly about endless delays in permitting projects, whether it’s a pipeline or a wind farm.

STRATEGIES: Eliminate duplication among various agencies’ requirements and set definitive timelines for responses.

» Get rid of the “need” standard for pipelines and transmission lines governed by state regulators.
» Crown an energy czar at the Department of Energy to corral other state agencies.
» Create a market-based system for offsetting environmental impacts of energy developments, such as habitat banking.

BLOWBACK: Energy developers and utilities have already pushed bills to expedite siting, but face stiff opposition. Transmission lines, pipelines, wind farms and large facilities such as liquefied natural gas terminals are inevitably controversial, and opponents don’t want to see the state paving the way for developers.

BIG IDEA: Green wheels
Transportation accounts for more than a third of Oregon’s greenhouse gas emissions. Getting anywhere near the goal of reducing greenhouse gases by 30 percent by 2020 means big changes, including doubling electric vehicle use and miles-per-gallon levels on other cars.

STRATEGIES: Replace the existing gas tax with a mileage tax. As it stands, the gas tax is a diminishing resource, destined to deliver less of the money needed to transform transportation.
» Incentives to public and private large-fleet operators to upgrade to more efficient vehicles; also, tax incentives and financing tools to increase efficiency and reduce emissions from trucks.
» Support expansion of bicycle infrastructure.
» Separated lanes or traffic signal priority for public transportation vehicles.