Summation of Distinctions or Advantages of Carbon Emission vs. Carbon Emission Cap (DRAFT 1.3.15 tb v.4)

Carbon Emission Tax & Dividend: A. Advantages 1. Sends comprehensible market based message to consumers, people understand "tax". 2. Dividend version of "tax and dividend", which remits funds back to citizens, builds support (stickiness) akin to the Alaska Permanent Fund Dividend which remits partial revenues uniformly to every resident citizen. 3. Redistribution (tax and refund) incentivizes toward low-carbon behavior shift because tax is applied to those who drive the most and funds non- or low-drivers who opt for non-carbon emission lifestyle. 4. Compared to a carbon "cap", a tax is more transparent where a cap is potentially subject to loopholes or work-arounds; retail energy is already metered at various points along the supply and consumption chain whereas emissions must be imputed through fuel burned. B. Disadvantages: 1. Effectively requires at least two Oregon constitutional amendments to address Oregon Constitution Art. IX, § 3(b), Art. VIII, § 2(1)(g), and Art. IX, § 3(a) . Two amendments are required because of Court's single issue in constitutional amendment rulings. Background findings available on request. 2. In all, five discrete actions appear to be necessary to effectuate a comprehensive carbon tax: two legislative referrals to address the constitutional amendments, one legislative statutory action, and two ballot referrals to be approved by the voting public. 3. Legal analysts predict judicial challenges would be inevitable. 4. Public opinion is not supportive; five opinion surveys by differing entities conducted over the past four years give accumulating evidence of inadequate public support to pass a carbon based tax on Oregon citizens, irrespective of how collected revenues are re-distributed. Evidence available on request. 5. One leading tax and rebate proposal to redistribute funds to registered voters, as compared to all citizens (as in the Alaska Dividend) may trigger a variety of unvetted but unintended legal based constitutional challenges. 6. As commonly conceived, a carbon tax may omit addressing as much as 40 %of equivalent emissions. For example, fugitive emissions from oil and gas extraction, transport and refining are not covered whereby metering may under-represent significant components of GHG emissions. 7. Carbon tax rates as commonly being discussed ($.30 - $1.00) are found to be insufficient to drive "market signal" based behavior change, studies suggest tax needs to be $4-6 / gallon equivalency.

Carbon Cap and Allocation (or alternately Cap and Trade) A. Advantages: 1. The objective of a "cap" is to definitively lower carbon emissions whereas a "tax" could raise revenue but not ultimately limit emissions. A "cap" could have a monetizing aspect (as does California AB32). 2. A "cap" would work in sync with California, which implemented a cap & allocation law (AB32) in 2006. With ten times the economic size of Oregon, implementing a similar policy may complement and strengthen a conceptual regional pact with cleaner trans-jurisdictional policies. The governor of has proposed legislation which adopts much of the AB32 format. California intentionally designed AB32 to encourage intra-jurisdictional cooperation with neighbor states through the Western Initiative, (WCI) or other jurisdictional participation; so far Canada's Ontario Provence has joined, others are considering. The WCI frontloads a considerable amount of background programatic design and judicial settlements to shorten the learning curve and program adoption that California has already gone through. 3. A carbon cap can be more effective in addressing fugitive emissions (non-metered) because it is based on a broader set of operating precepts than metering taxation. Research finds that fugitive emissions have increased significantly with fracked fossil fuel extraction, a consequence which is producing massive amounts of climate aggressive emissions. 4. A carbon cap likely falls entirely within the role and capacity of the Legislative assembly, thereby may be enacted more timely and directly. 5. Public opinion research finds the majority support for outright regulation of emissions. B. Disadvantages: 1. A cap and allocation program is seems obscure, lacking the greater visual perception of the components which can be measured at meters. In such obscurity lurks perception of loopholes and special exceptions. 2. A cap does not directly price the value of carbon , market driven behavior shifts, to extent obtained, come indirectly. 3. A cap which mimics the California model in the current form has a presumptive market value floor of $10 / ton of carbon with an increase currently set at 5% per year. This is deemed by the NeRC PSU study for the Oregon Legislature to be well below a level for behavior motivation. The countervailing view here is that it is the cap, not the administrative revenue focus, which obtains the target results. Another countervailing position is that the current level of proposed taxation is also low (although higher than $10/Mton) - that the is inadequate but yet lacks the teeth of a finite declining cap.