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Oregon's Anti-Coal Law Could Have Far-Reaching Effects

In a decision that could spell the end for coal in the West, Oregon became the first state in the nation to pass legislation to completely do away with the dirty energy source.

Coal is not king -- at least not in Oregon. Earlier this month, Oregon became the first state in the nation to pass legislation to completely do away with coal from its resource mix. The law puts Oregon among a handful of states with renewable energy standards of 50 percent or higher. What’s more, the legislation could very well spell the end for coal throughout much of the West.

The Clean Electricity and Coal Transition Act phases out coal by 2030 and commits its two largest utilities -- Portland General Electric and Pacific Power -- to supplying at least half of their electricity from renewable sources by 2040. “The coal piece is more comprehensive than any state legislation we’ve seen in the past,” says Noah Long, legal director of the Western Energy Project for the Natural Resources Defense Council (NRDC). “It’s not unprecedented, but the law requires utilities to remove their existing coal generation from their portfolios. It represents a growing trend to move away from the dirtiest energy sources.”

Indeed, Oregon joins several states that have indirectly targeted coal. California passed a 50 percent renewable portfolio standard last year; New York’s governor recently bumped up the state’s renewable energy standard; and Hawaii and Vermont are looking at very high renewable energy standards, 100 percent and 75 percent, respectively. 

The Oregon legislation was hammered out with the cooperation of the state’s two biggest utilities, along with consumer advocates and environmental groups, including the NRDC. That’s a big deal, according to Long. “To the extent that [Portland General and Pacific Power] are willing to say, ‘Yeah, we’re ready to start stepping away from coal,’ that’s a pretty clear indication of the kind of choices they are going to be making across their whole territory.”

Both utilities own out-of-state coal plants, which actually gives them reasons for wanting to reduce the role coal plays in their portfolios. For one, most of the coal plants they own in the interior West that supply California, Oregon and Washington are old and face increasing costs and decreasing reliability. Furthermore, the cost of natural gas is low and renewable energy costs are declining, making coal a less attractive source. “Utilities are thinking about this whether or not there’s pressure from state regulators or legislators to move to cleaner sources of generation,” says Long, “purely based on the economics and, to the extent they are thinking about it, the public health and environmental risks associated with coal as well.”

Utilities tend to plan 20 to 40 years out. So Oregon’s legislation gives its utilities certainty, allowing them to plan and invest in new energies. It also helps them in planning compliance with the Environmental Protection Agency’s Clean Power Plan, which gives states until 2030 to reduce their carbon emissions by a third from 2005 levels. Although the U.S. Supreme Court has temporarily blocked the plan, some states are moving ahead under the assumption it will be upheld.

For its part, the Oregon Public Utility Commission (PUC), which regulates state utilities, says it was left out of the process and silenced by Gov. Kate Brown when it tried to speak publicly about the bill. But Brown says the PUC was actively engaged throughout the session in shaping the outcome. "They held their own hearing on the proposal prior to session," she says, "and testified on the bill three different times, resulting in constructive dialogue and modifications."

In talking points obtained by The Oregonian, the commission says the plan “could be very expensive to consumers” because Oregon ratepayers would be forced to buy more expensive replacement power and it would do little to reduce greenhouse gas emissions because the out-of-state coal plants would continue running.

But proponents of the bill say coal plants could actually be forced to close. Debates leading up to its passage warned it could lead to job losses in the coal industry. Both critics and proponents alike cite California’s mandates that utilities begin adding renewables to their energy portfolios, as well as a recent bill that precludes new long-term investments in high-emitting fossil resources. The requirements, they say, have led to the retirement or planned retirement of coal plants in several Western states, including Nevada and Utah. “I think we can expect to see the same from this legislation,” says Long. “The result will not just be cleaning up the Oregon electric infrastructure, but really cleaning up the electric infrastructure across the entire West.” 

*This story has been updated from the version that ran in the April print magazine to include a response from Oregon Gov. Kate Brown regarding the claim the Oregon Public Utility Commission made that Brown left the commission out of the process and silenced it when it tried to speak publicly about the bill. 

Elizabeth Daigneau is GOVERNING's managing editor.
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