Competitiveness under Carbon Pricing in Oregon
Oregon’s Carbon Policy Office commissioned Vivid Economics to analyse the potential competitiveness impacts of a state-wide cap-and-trade. First we identified potentially emissions-intensive and trade exposed (EITE) sectors using a range of carbon leakage metrics. The second part of the work included an indirect impact analysis, detailing sectors that might face competitiveness impacts due to their electricity intensity or natural gas intensity. Finally, we synthesised our results and combined with insights from the experiences of international jurisdictions to develop policy recommendations on the design of a cap-and-trade which maintained both environmental integrity and competitiveness. The study combined quantitative analysis with extensive bilateral stakeholder engagement to generate more nuanced insights and solve data availability challenges, a factor crucial to account for given the nature of inter-state trade. This Work has directly informed the design of Oregon’s cap-and-trade scheme.
Date: February 2019