Oregon’s Climate Protection Program 2.0 – November 2024 Changes

Oregon’s Climate Protection Program (CPP) aims to reduce greenhouse gas (GHG) throughout the state by implementing a declining cap and trade system codified under Oregon Administrative Rules (OAR) Chapter 340 Division 273. The program is designed to reduce GHG emissions from fossil fuels in Oregon by 50% by 2035 and 90% by 2050. To achieve these GHG emissions reductions the CPP will require certain companies to obtain a CPP permit or CPP addendum to their current Title V permit.

What is the status of Oregon’s Climate Protection Program 2.0?

In November 2024, the State of Oregon issued Administrative Order DEQ 18-2024, which included the CPP’s new rules as well as permanent rule amendments to others. The stated goals of the CPP are to significantly reduce GHG emissions, achieve co-benefits from other air contaminant reductions, and to enhance public welfare for Oregon communities, especially environmental justice (EJ) communities.

The CPP journey began back in 2021 and changed over time. In 2023, the CPP was invalidated by the Oregon Court of Appeals and the Oregon Department of Environmental Quality (ODEQ) had to go back to the drawing board. ODEQ conducted workshops and received feedback on the CPP before proposing the 2024 version of the program. The main differences in the new 2024 CPP are:

• Two-year compliance period (instead of three-year)
• Periodic survey to determine if the CPP has affected natural gas customer rates significantly
• Direct regulation of emissions-intensive and trade exposed (EITE) sources
• Additional fee for Community Climate Investment (CCI) credits
• Additional inclusion of EJ communities in the CCI program
• Removal of best available emission reduction approach

So now that the CPP is official – who needs to take action?

The CPP is now codified in OAR 340-273. This section outlines the CPP structure, emissions caps, compliance requirements, and regulatory oversight.

There are some entities that are affected by the CPP:

• Supplies of liquid fuels and propane that exceed certain thresholds of covered emissions.
• Local natural gas distribution companies.
• A stationary source that meets the definition of EITE: facilities with certain North American Industry Classification System (NAICS) codes that have emitted 15,000 metric tons of carbon dioxide equivalent (MT CO₂e) or more annually since 2020. The sectors include:
  • Aerospace Product and Parts Manufacturing
  • Basic Chemical Manufacturing
  • Cement and Concrete Product Manufacturing
  • Foundries
  • Fruit and Vegetable Preserving and Specialty Food Manufacturing
  • Glass and Glass Product Manufacturing
  • Iron and Stell Mills and Ferroalloy Manufacturing
  • Lime and Gypsum Product Manufacturing
  • Nonferrous Metal (except Aluminum) Production and Processing
  • Nonmetallic Mineral Mining and Quarrying
  • Other Fabricated Metal Product Manufacturing
  • Other Nonmetallic Mineral Product Manufacturing
  • Pesticide, Fertilizer, and Other Agricultural Chemical Manufacturing
  • Plastics Product Manufacturing
  • Pulp, Paper, and Paperboard Mills
  • Sawmills and Wood Preservation
  • Semiconductor and Other Electronic Component Manufacturing
  • Veneer, Plywood, and Engineered Wood Product Manufacturing
• A stationary source that meets the definition of a direct natural gas (DNG) source – facilities that meet the following three criteria:
  • Not defined as EITE above.
  • Have emitted 15,000 MT CO₂e or more annually since 2020.
  • Uses natural gas distributed to the source by an entity other than a local distribution company.

The first compliance period started January 1, 2025 and goes until the end of 2027. Companies will first have to demonstrate compliance in December 2028.

Compliance

Facilities or businesses subject to the CPP requirements must apply for CPP Permits according to OAR 340-273-0150. Those permits will come with reporting and recordkeeping requirements. ODEQ will notify some facilities required to apply for CPP’s, but facilities must also evaluate if they are required to apply themselves. Applications will require facility information, process flow diagrams, air permits (if applicable), and product information including amount produced over the past 5 years, the proposed metric of emissions intensity, and the calculation of greenhouse gas emissions for those 5 years.

ODEQ distributes compliance instruments each year, which are determined by the GHG emissions cap. These instruments allow a facility to emit 1 metric ton of carbon dioxide equivalent (MT CO₂e). Companies can trade compliance instruments or can contribute to the Community Climate Investment (CCI) fund to satisfy compliance. For 2025, ODEQ is adding additional compliance instruments for fuel suppliers and will use emissions data to evaluate annual emissions against a benchmark of 81,003,850 MT CO₂e. If the total emissions for the permitted facilities are at least 10,000 MT CO₂e below the benchmark, ODEQ will provide additional compliance instruments to facilities.

How to prepare:

1. Understand the GHG emissions generated by your facility and start the data collection process.
2. Determine if your facility or business is subject to the CPP based on your facility type and/or your facility-wide GHG emissions.
3. Strategize the best way for your facility or business to comply and prepare budget for permitting, compliance, fees, and data management resources.

How ALL4 can help:

ALL4’s sustainability experts can help companies strategize compliance with Oregon’s CPP. For companies that have already started preparing for the CPP, ALL4 can help you strategize sustainability goals and long term efforts and collect and curate data to support analysis and reporting. For companies addressing the CPP for the first time, ALL4 can help develop and partner with company leaders to develop sustainability strategies and get into compliance with Oregon’s CPP. For more information, please contact Madison Jones at mjones@all4inc.com or 678-293-9435, or check out ALL4’s contact page.