State of Oregon Department of Environmental Quality Comments Greenhouse Gas Emissions Program: Illustrative Scenarios and Program Development This document is a compilation of written comments received in response to DEQ’s illustrative scenario discussion held on Dec. 2, 2020 and general program development. Comments 350 Deschutes 2 Ash Grove Cement Company 3 Climate Solutions and Oregon Environmental Council 6 Columbia River Steamship Operators’ Association 9 Darlene Chirman 12 Dave White 13 Environmental Defense Fund 19 Elders Climate Action 25 Elizabeth Graser-Lindsey 32 EVRAZ 34 Food Northwest 63 Green Energy Institute 67 League of Women Voters 74 Marsha Hanchrow 76 Natural Resources Defense Council 77 Oregon Association of Conservation Districts 78 Oregon Fuels Association 80 Oregon Wild and Beyond Toxics 82 Pacific Northwest Chapter of Institute of Scrap Recycling Industries 84 Dr. Pat DeLaquil 86 Ralph Cohen 88 The Climate Trust 90 1 Statement of Interest for the DEQ Rulemaking Advisory Committee Submitted by: Diane Hodiak, Executive Director, 350Deschutes. Thank you for this opportunity. Stretch target by 2050. Which is beyond the 35% below 1990 levels by 2035 Thank you for the opportunity to submit my comments. Please include Forest Biomass Emitters and Burning Sites. Emission reduction Today is Superior to future emission reductions. The carbon debt of forest biomass burning approaches 75 years before it truly reaches carbon neutrality. Particularly if lifecycle analysis is used and emissions from transport and storage are included. Nonetheless, when the final “Biomass Sustainability and Carbon Policy Study” (aka the “Manomet Report”) was issued, the results surprised even the researchers. The study concluded that net carbon emissions from burning biomass in utility-scale facilities emitted more carbon than even coal, and that it would take decades to pay off the “carbon debt” created by harvesting forests for fuel. Small burners (i.e. thermal and combined-heatand-power facilities) with higher efficiencies were found to have shorter payoff periods for their carbon debt, but even their emissions exceeded those from fossil fuels for several years. Partnership for Policy Integrity Offsets are important, but secondary to real emission reductions. Here in Central Oregon, an equity group, Warm Springs Tribes have a carbon sequestration program. This is a positive instance of positively sourced offsets. But limitations (I believe California ARB is at 8%) are needed and they should follow strict rules. (real, quantifiable, additional and permanent project-based emission reductions) They should not be allowed for polluters who operate in locations in proximity to vulnerable communities. Interagency Communication and Problem Solving What is the vehicle or committee to make this happen? Beyond the Global Warming Commission which has been mired in politics. Is there a hub for synergizing ideas and solutions? One agency might help another or work together on public works. For example, ODOT might acquire land for mobility paths while another solves the problem of vacant space. Or, one agency might share their GHG emission inventory. (hopefully each agency will do one?) to assist another agency in doing their inventory. 2 December 8, 2020 VIA EMAIL Colin McConnaha Manager, Office of Greenhouse Gas Programs Oregon Department of Environmental Quality 700 NE Multnomah Street, Suite 600 Portland, OR 97232 Re: Comments on DEQ’s Cap & Reduce Rulemaking Scenario Materials Dear Mr. McConnaha: Ash Grove Cement Company (Ash Grove) appreciates the opportunity to comment on the Department of Environmental Quality’s (DEQ) December 2, 2020 greenhouse gas (GHG) Cap & Reduce Illustrative Scenarios document. Ash Grove operates a portland cement plant in Durkee, the only such plant in the state of Oregon. The cement produced at this plant is used in the construction of highways, bridges, commercial and industrial complexes, residential homes, and a myriad of other structures. Any cement used in Oregon either comes from this plant or is imported from another state or country. A greenhouse gas life cycle analysis for portland cement would recognize that for cement imported into the state, a substantial amount of the GHG emissions is attributable to transportation of the product. Cement imported into the state will inevitably have a significantly larger carbon footprint than cement produced in the state. Ash Grove has a long history of reducing GHG emissions in Oregon. Energy is Ash Grove’s largest production cost and so we have every incentive to reduce our overall energy consumption. Towards this end, Ash Grove operates a highly efficient preheater/precalciner kiln that employs extensive heat recovery to extract and reuse thermal energy across the process. In recognition of this effort, the U.S. Environmental Protection Agency awarded the Durkee plant ENERGY STAR® certification in 2016. We have also heavily invested in the plant to minimize indirect emissions associated with our use of electricity in the process. Ash Grove remains committed to producing cement in Oregon and doing so in a manner that minimizes our carbon footprint to the extent reasonably possible. 3 In 2018, the Oregon Carbon Policy Office engaged Vivid Economics (Vivid) to conduct a study of industry sectors in Oregon that are subject to leakage. Vivid defined “leakage” as the process whereby carbon cost passthrough causes production shifts from jurisdictions with more carbon regulation to jurisdictions with less carbon regulation raising net global emissions. The 2018 Vivid study noted that cement manufacturing is consistently identified in all GHG programs as subject to leakage; for example, the California Air Resources Board identifies cement manufacturing as at “high risk” of leakage. Vivid concluded in its analysis that Ash Grove’s Durkee cement plant would likewise be subject to significant risk of leakage as the result of carbon pricing. In short, Vivid concluded on behalf of the Oregon Carbon Policy Office that portland cement manufacturing is an Emissions Intensive, Trade Exposed (EITE) industry. Ash Grove appreciates that in the December 2, 2020 Illustrative Scenarios document, the Department identified the containment of costs for businesses and consumers as one of the three primary goals of the Cap & Reduce program. This concept is particularly important for EITE industries as a failure to recognize cost would result in a global increase in GHG emissions. Such an outcome under Cap & Reduce would harm Oregon’s economy and promote climate change. Those are outcomes that we can all agree are to be avoided. Ash Grove likewise appreciates the outline of the three scenarios in the December 2 document, but was looking for details on how EITEs would be addressed under any such program. None of the three scenarios outlined a compliance pathway that would address the unique needs of an EITE industry such as cement manufacturing. It is critical that each EITE industry be held to an emissions performance level reflective of what best available technology can achieve. This can best be accomplished by benchmarking for EITE industries and distributing allowances based on what can reasonably be achieved instead of what has been achieved historically. Each individual EITE can then make its own resource allocations to comply in the most effective way. However, given that, by definition, an EITE cannot pass carbon costs through to its customers, a conventional mass cap approach such as is outlined in the three scenarios cannot be applied to the small segment of the state’s emissions inventory reflective of EITE industries. Otherwise, as the Vivid study clearly pointed out, the unavoidable result will be to squeeze production and jobs out of the state. The blessing and curse of Oregon is ready proximity to ports that make it easy to import substitute products. Where, as with portland cement, there is global oversupply and the good itself is fungible, even small price increases can devastate a local business resulting in increased global GHG emissions. Ash Grove stands ready to assist the Department as it develops specific provisions for EITE industries. Through our corporate parent, CRH, we have access to a wealth of experience operating under other carbon schemes including those in the European Union and Canada. We recognize the need to keep production and jobs in the state while exemplifying good practices. Towards that end we encourage DEQ to call on us to help in developing a program that will ensure that EITE industries do their part in limiting GHG emissions but also remain viable employers and leaders in their communities. A hard mass cap with mandatory reductions bearing no correlation to what is technically feasibly will do nothing to safeguard low income communities such as those in Baker County or to reduce global GHG emissions. By contrast, a program that incentivizes EITE industries to implement technically feasible GHG reductions benefits the state in multiple ways. 4 In addition to a technology focused program, we also encourage DEQ to build into its Cap & Reduce program features that will encourage the replacement of virgin fuels with alternative fuels consisting in part of materials that have already served their original intended purpose. In a heavily controlled facility such as a cement kiln these fuels can reduce global GHG emissions associated with fuel extraction and processing while minimizing any emissions. Incorporating this approach into the Cap & Reduce program will address issues of equity, emissions and cost. We appreciate your work on this program and your willingness to ensure that EITE industries remain a viable part of Oregon’s rural counties. The most recent statistics from Oregon’s Department of Human Services indicate that Baker County has a nearly 30 percent higher poverty rate as compared to the rest of the state. A previous economic review board determined that 116 Ash Grove Cement jobs in Baker County would affect 600 spin off jobs locally and is equivalent to 114,000 jobs in Portland. The loss of Ash Grove Cement would serve to increase the disparity in poverty between Baker County and the remainder of the state.