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City of Portland Releases Sharply Reduced Version of Controversial Carbon Tax

The Bureau of Planning and Sustainability scaled back costs for smokestacks by about 80 percent.

The city of Portland’s Bureau of Planning and Sustainability on Oct. 25 released a new iteration of a proposed carbon tax that fell flat last year.

Portland pushed early in 2020 to become the first U.S. city to enact a carbon tax but went back to the drawing board after its initial proposal drew heavy fire from those who would have paid it: industrial companies and large nonprofits such as Oregon Health & Science University. (OHSU generates much of its own electricity.)

Related: The Wants a New Carbon Tax. It Might Kill Bottle Recycling in Oregon to Get One.

In 2020, BPS proposed a fee ranging from $15,000 to $40,000 for all businesses and public entities required to have air contaminant permits from the Oregon Department of Environmental Quality. The new proposal includes a $20,000 fee for all permit holders.

The far larger change comes from a tax on the volume of certain emissions. The original proposal called for a $25 per tax per ton of carbon emitted; the new proposal calls for a much higher rate—$250 per ton—but the tax will cover a narrower range of emissions: “NOx (nitrogen oxides) SOx (sulfer oxides), PM (particulate matter), and volatile organic compounds as reported to Oregon DEQ.”

The BPS will continue to work on a plan for carbon emissions, which may or may not result in a separate tax on carbon emissions (as distinct from NOx, SOx, particulates and volatile organic compounds) in the future.

The difference is enormous: under the 2020 plan, the base fee and variable tax would have raised $11.3 million a year. The new proposal would raise about $2 million in total.

Evraz Steel, the North Portland steel mill that BPS has identified as the largest single emitter in the city, would see its cost from the $2.72 million under the 2020 proposal to $163,000 under the new plan.

One other change in the new proposal: Public entities and large non-profits such as OHSU, Portland State University, Providence Health and Services and Legacy Health, all of which were big payers under the original plan, are now exempt.

The Bureau of Planning and Sustainability says if the new proposal gains City Council approval, it will use the new money to “support pollution reduction programs.”

There is now a public comment period open until Nov. 19.