Will massive clean-energy fund take Portland to its climate goal? No – and that’s not its objective - OregonLive

Will massive clean-energy fund take Portland to its climate goal? No - and that’s not its objective - oregonlive.com

The Portland City Council is expected to approve $750 million in climate-action projects from the massive Portland Clean Energy Community Benefits Fund. It’s the largest-ever climate investment in the city’s history.

The fund, flush with revenue, is considered a cornerstone of Portland’s climate work. But it’s unlikely to meaningfully cut the city’s carbon pollution or help it reach net-zero by 2050– even though the fund’s investment plan specifically promises to take a significant bite out of carbon emissions.

The five-year Climate Investment Plan, up for a City Council vote on Wednesday, has Portland poised to distribute tens of millions of dollars for projects where emission reductions will be slim and very costly.

“Does the fund live up to its promise of producing clean energy and reducing carbon emissions? The answer is no. It doesn’t do much for the environment,” said Todd Myers, environmental director with the Washington Policy Center, a Seattle-based think-tank that promotes public policy based on free-market solutions.

But city staff and community leaders involved in climate-change and environmental-justice work say that’s intentional because the clean-energy fund wasn’t designed to maximize emission reductions – rather, it was conceived to help protect low-income residents and communities of color from the most severe impacts of climate change.

“Policies all around us were clearly telling us that the green-energy transition is happening, but all of those policies were leaving black and brown communities and low-income folks out of the equation,” said Damon Motz-Storey, the Sierra Club Oregon Chapter’s director and former spokesperson for the Coalition Communities of Color, one of the groups that helped create the fund. “The primary drive for putting together the Portland Clean Energy Fund was to guarantee that there would be community benefits for the people who are usually left out due to systemic racism.”

Costly carbon reductions

The clean-energy fund stems from a ballot measure overwhelmingly approved by Portland voters in 2018. Created and led by local leaders from the local Asian, Hispanic, Black and indigenous communities, the measure envisioned distributing approximately $50 million each year for energy efficiency, green infrastructure and green jobs training.

As it’s turned out, the revenue flowing into the fund – via a 1% tax on large retailers in the city – has been double that amount. The surplus comes at a time when many city bureaus face budget shortfalls and Portland is struggling with significant and costly challenges, including a housing crisis and homelessness, and an exodus of high earners to the suburbs or out-of-state.

The $750 million allocation – the third and largest to date – comes after a rocky start and a bruising auditor’s report last year that called out the fund’s lack of performance standards and accountability systems, and raised concerns about its alignment with the city’s climate goals. This summer, City Auditor Simone Rede said the fund has made progress after an overhaul led by Commissioner Carmen Rubio. Rubio heads the Bureau of Planning and Sustainability, which runs the clean-energy fund.

The Climate Investment Plan, a key part of that overhaul, is to guide investments over the next five years and “ achieve major carbon reductions in ways that benefit those most impacted by the climate crisis.” The Council will fund the following categories included in the plan: climate jobs (for job training and contractor development), energy efficiency and renewable energy (for home-energy retrofits and other building upgrades), transportation (for an e-bike program and expanded access to public transit), green infrastructure (for tree planting and maintenance), regenerative agriculture and organizational-capacity building.

The plan introduces multiple metrics by which to assess funded projects.

Some of those metrics are financial in nature, such as reducing residents’ utility bills or transportation costs, distributing free e-bikes or expanding access to job training and green jobs. Others focus on livability, including improving air quality and comfort in homes and increasing the tree canopy in areas known as heat islands.

Another key metric to be used across most funding categories is the projected amount of carbon emissions slashed (or carbon captured), either over five years or the lifetime of a particular project.

An analysis of the cost of reducing carbon – calculated by dividing the allocated funding amount by the emission-reduction projection in each category – shows that those costs vary significantly from category to category. They range from $28 per metric ton of carbon reduced to help business owners to purchase EV trucks and vans (though that low number is an outlier) to more than $10,000 per metric ton for clean-energy retrofits for multi-family housing. For most of the Climate Investment Plan’s allocation categories, the cost is well over $1,000 per metric ton of carbon dioxide reduced – which most experts agree is very expensive and hence results in small carbon-pollution reductions.

Some experts view this focus on community benefits, instead of the environment overall, as misguided.

“If climate change is truly a crisis,” said Myers, the Washington Policy Center environmental director, “then we should get the maximum environmental climate benefit for every dollar spent.”

Typically, the cost of reducing emissions ranges from tens to hundreds of dollars per metric ton of reduced carbon – not thousands. Carbon offset credits – which pay for biomethane, reforestation or other projects usually located outside Oregon or overseas – can be purchased for about $10 or $35 on carbon markets by polluting companies or other parties, though experts agree many of the credits have significant shortcomings. Other emission-slashing interventions, such as wind or solar farms, also range in the tens to hundreds of dollars per metric ton of reduced carbon.

For comparison, the social cost of carbon, a benchmark that represents the damages of emitting one ton of carbon dioxide, is currently estimated at $51, though The U.S. Environmental Protection Agency has proposed raising it to $190. The figure, which critics say is still too low, can be used to assess the economic benefits of climate-change policy.

But most carbon-reduction cost estimates are meant for national markets, making it hard to come up with a cost-effectiveness threshold for local projects, said Kenneth Gillingham, a professor of economics at Yale University who co-authored a paper on the subject.

In Portland, the largest slice of the funding the City Council is set to approve – $397 million, or more than half of the allocations – is slated for renewable-energy and energy-efficiency measures and also comprises some of the least cost-effective carbon-reduction strategies.

Much of it will pay for home-energy retrofits – added insulation, new windows or heat-pump systems – in multi-family housing, single-family homes and small commercial buildings. Their carbon-reduction benefit is small partly because retrofits are expensive, but also because the region’s electric grid is increasingly reliant on renewables, which reduces the emissions associated with homes that already rely on electricity.

In the case of some projects where costs are lower, the projected emission reductions are aspirational. Some hinge on residents’ willingness to change hard-set habits. The e-bike voucher program – which aims to distribute 6,000 e-bikes and related gear at a cost of $20 million – can reach its emission-reduction goals only if those who receive the e-bikes use them for more than recreation.

Commissioner Rubio acknowledges some of the costs will be high, but said they are worth the investment.

“We need to reduce carbon across all sectors of our economy – and it is a fact that reducing carbon from our existing housing and building stock, which account for 40% of our total emissions, is very expensive,” Rubio said in a statement to The Oregonian/OregonLive.com. “Not taking action in any sector is even more expensive and will only lead to greater costs down the road.”

“A drop in the bucket”

Portland’s climate-change projects may be well-worth the money – despite the fact that they are expensive and likely to result in low-emission reductions – as long as they have proven community benefits, Gillingham said.

“If you are (funding) a measure that costs $10,000 per metric ton, you are doing it primarily for some other reason, such as to improve the well-being of disadvantaged populations,” Gillingham said. “It’s not really a climate-change policy then, since it would be a very inefficient way to reduce climate change.”

Although the climate-investment plan promises to “meaningfully” reduce and measure emissions, city staff and fund proponents in the community say the clean-energy fund was not intended to be the main funding source for Portland’s climate action.

“$750 million is a substantial amount of resources, but it is still relatively a drop in the bucket for the full investment necessary to truly meet our climate goals,” Donnie Oliveira, director of the Bureau of Planning and Sustainability, told city commissioners last Wednesday.

The $750 million represents just 1.5% of the money estimated to be needed to fulfill Portland’s net-zero-by-2050 climate ambitions. According to a market study commissioned by the planning and sustainability bureau, the city would need about $50 billion at minimum to implement the climate emergency workplan it adopted last summer, said Oliveira. That’s seven times Portland’s $7.1 billion budget for next fiscal year.

City staff and community supporters say that while the plan may not maximize carbon reduction at the lowest price, one of its main benefits is funding projects in Portland that will directly support the city’s low-income households and communities of color.

“We’re not out there investing in utility-scale solar in eastern Oregon,” Sam Baraso, the fund’s program manager, told commissioners during a work session in August, “because it doesn’t create those local benefits to Portlanders here.”

– Gosia Wozniacka; gwozniacka@oregonian.com; @gosiawozniacka

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