News From My Backyard: Oregon Governor Signs Landmark Renewable Energy Bill Into Law - More Clean Energy Legislation to Follow

Legislation requires Oregon utilities to get 25% of their energy from renewable sources by 2025; more bills working their way through Legislature

Joined by legislators, state leaders and hundreds of renewable energy supporters, Governor Ted Kulongoski signed Senate Bill 838 into law yesterday, creating a renewable energy standard in Oregon that requires the state’s largest utilities to meet 25 percent of their electric load with new renewable energy sources by 2025.

Image: Governor Kulongoski signs SB 838 flanked by state legislators, including Speaker of the House Jeff Merkley (D-Portland) and Senator Jason Atkinson (R-Central Point), a co-sponsor of the bill

Hailed by many as Oregon's most significant piece of environmental legislation in decades and the biggest energy bill to pass since 1999's electricity restructuring law, the landmark bill enjoyed widespread, bipartisan support from Oregonians across the state. The bill, known as the Oregon Renewable Energy Act, passed both the Oregon House and Senate with 2/3rds majorities (see previous posts here and here).

The Governor made establishing a renewable energy standard a legislative priority because of the numerous benefits it will create for Oregonians across the state, according to a Governor's office press release.

“This bill is the most significant environmental legislation we can enact in more than 30 years that will also stimulate billions of dollars in investment – creating hundreds, if not thousands, of jobs in both urban and rural Oregon,” Governor Kulongoski said.

“Today we are not only setting the state on a responsible path toward 25 percent renewable energy by 2025, but we are protecting our quality of life, reducing greenhouse gas emissions, stimulating our economy, and protecting ratepayers with more stable and predictable utility rates.”

Oregon's largest three utilities, Portland General Electric, Pacific Power and the Eugene Water and Electric Board - collectively serving about 3/4 of the state's electricity demand - will have to meet the following renewable energy targets: 5 percent by 2011; 15 percent by 2015; 20 percent by 2020; and 25 percent by 2025.

Utilities that contribute less than three percent to the total state energy load, including the state's many publicly-owned utilities, are exempt from meeting 25 percent of their demand with new renewable energy source by 2025. Instead, they must meet either a five percent or 10 percent target, depending on their size. However, they must comply with the large utility standard if they make new investments in coal-fired generation.

To meet the standard, electricity must come from a new renewable energy source that was in operation on or after January 1, 1995. Sources of energy that count toward the standard include wind, solar, wave, geothermal, biomass, new hydro or efficiency upgrades to existing hydro facilities. Utilities may generate their own renewable energy, purchase energy from others or purchase tradeable Renewable Energy Certificates (RECs) to comply with the standard.

In addition, if none of those options are cost-effective in any given year, utilities have the option to make an Alternative Compliance Payment (ACP) to help meet their renewable energy requirement under the standard. The money will be placed into an account that can be used at a later date to acquire renewable energy, invest in conservation or, in the case of consumer-owned utilities, research and development into emerging renewable energy technologies, such as wave power.

“This bill is not the end – it’s just the beginning of a much broader, sustained effort to reestablish, and maintain, Oregon as a leader in innovative environmental and energy policies that protect our quality of life, contribute to a robust economy and combat global warming,” the Governor continued.

“There is still work before us this session to build on today’s success. We must not leave without enacting the biofuels legislation and expanding the business energy tax credit program so we can continue to address the very real issue of climate change and create a stronger, cleaner and more energy independent Oregon.”

The Governor and environmental and clean energy advocates have been pushing for a package of tax incentives for renewable energy generation and biofuels this session, in addition to the Renewable Energy Standard bill, SB 838. This package cleared the Oregon House nearly unanimously early in the session (see previous post) but are still working their way through the Senate.

The biofuels bill, HB 2210, provides a package of incentives for the production of biofuels and the production and collection of biofuel feedstocks in Oregon. The bill also includes a renewable fuels standard that requires the blending of an increasing percentage of ethanol and biodiesel in gasoline and diesel sold in Oregon, provided that production of biofuels in Oregon grows to a sufficient size. Rounding out the package of incentives, HB 2211 and 2212 expand popular and successful tax credits for both businesses and residential energy users who invest in renewable energy or energy efficiency projects.

A number of other clean energy bills are pending in the Oregon Legislature this year, making it by far the most active session in decades for energy legislation:

HB 2620, ensures that all new public building projects will designate 1.5% of construction costs to installing solar power.

SB 576 would require state agencies to construct new buildings to LEED Gold Standards, which could lower those buildings' energy usage by 15%; and

HB 2876 would require state buildings to achieve a 20% reduction in energy usage by 2015.

And as if that wasn't a full enough plate, a package of three climate change bills has also been proposed, although only one is likely to pass this session - HB 3543, the Climate Integration Bill, which would establish requirements for utility reporting of carbon emissions, create a state policy commission on climate change, and establish a university-based research center on climate change policy.

The remaining two bills - which would establish a load-based cap and trade program for carbon emissions from the electricity sector and authorize a California-style emissions performance standard for long-term power contracts - have been tabled for this session and will likely be taken up in a special session proposed for February 2008.

It's certainly fair to say that 2007 is shaping up to be a landmark year for clean energy legislation in Oregon. Stay tuned to see how the remaining bills progress as the 2007 Oregon Legislature enters its final - and often frenetic - few weeks.

[Update 7/10/07: The session has closed, and what a session. Here's the recap.]