December 14, 2017

Evaluating Cap-and-Trade: An Oregon Example

Oregon lawmakers are debating ways to reduce greenhouse gases, and analysis by FTI Consulting, Inc. using the REMI model has shaped the discussion.

In March, FTI’s Economic Impacts Group released a study for the Associated Oregon Industries Research and Education Foundation assessing SB 1574 (2016), a cap-and-trade bill representative of several others under consideration in the state.

The proposal called for monetizing emissions by assigning costs, and would have paved the way for integrating an Oregon market for carbon allowances with California’s larger cap-and-trade market. FTI’s study, titled “Oregon Cap-and-Trade — An Analysis of the Economic Impacts of Oregon SB 1574 (2016)”, was honored in October at the REMI Users’ Conference with a George I. Treyz Award for excellence in analysis in the category of energy, economy and the environment.

You can view the full report here. One of the authors, Scott Nystrom, discussed this subject for a REMI guest webinar – you can view the recording of the webinar and the slides in our archives.

Mr. Nystrom along with co-authors Ken Ditzel and Evan Klein evaluated potential effects using three tools in concert: PLEXOS, an electric sector model; CTAM, an emissions model customized for Oregon; and REMI PI+, our leading model for simulating the total economic effects for policy changes. The authors found that the plan would result in lost economic growth (compared to the baseline) of $1.3 billion in 2035 and $4.5 billion in 2050.

While the specific proposal was not passed in 2016 or this year, the analysis is helping inform ongoing discussions about emission reduction policies.