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Why Price Carbon—Can’t We Just Regulate It?

Getting creative with carbon pricing (Part 3)
This post is 24 in the series: Cashing In Our Carbon

Most Americans—including most Republicans—want to regulate carbon pollution. Oregon and Washington have already set legally binding limits on the climate-changing gas. Next, climate change warriors in Olympia and Salem are trying to make those limits enforceable. They’re considering hard emissions caps enforced through limited permits and complemented by an array of targeted policies.

But what if Oregon and Washington’s lawmakers fail to insert sharp incisors in their beyond-carbon rules? Desperate for revenue to fulfill its McCleary obligations, Washington might pass a modest carbon tax not designed to slash pollution. Oregon might do the same, for its own revenue reasons. Such taxes would nudge the states’ economies toward a clean-energy transition, it’s true, but they would not guarantee that emissions drop to the statutory goals.

And, I shudder to ponder it, but the legislatures might simply refuse to price carbon at all, at least not yet.

In fact, a few state legislators, briefed on the fine points of carbon pricing, have rolled their eyes at the political challenges and said, “Why do we have to price it? Can’t we just regulate it?” Polls suggest some voters would actually prefer direct regulation. The logic is seductive: Polluting is irresponsible behavior. Polluters should knock it off. If they don’t, authorities should make them.

This article describes that scenario: what would it look like if we just make polluters emit less carbon?

Regulating our way to a post-carbon world.

Unfortunately, “just make them” is not an elegant picture. The authorities in charge of “making them” would be state agencies, but clashing jurisdictions, inadequate legal tools, administrative silos, and potentially perverse incentives across economic sectors make a purely regulatory approach to carbon limits a fourth or fifth or tenth best approach. Still, it’d be better than nothing. It would limit pollution, albeit in a splintered and probably costly way. In any event, it’s important to understand the regulatory options, just as I reviewed other imperfect but conceivable paths beyond carbon.

Paradoxically, some of the policies state agencies would implement might be quite effective if implemented as complements to a carbon cap, because they help cut pollution inexpensively and bring other benefits like new jobs or cleaner air. But they would work less well without a price as a backstop. In the absence of a cap (or self-adjusting tax), each agency could only quash pollution if granted authority to write and enforce strong new rules—authority on a scale that legislatures have rarely granted.

Here are three variations on the agencies-in-charge path, which, to make more fun, I’ll describe as if you, Dear Reader, were the entire state legislature of either Oregon or Washington:

1. You (the legislature) make state agencies responsible for hitting their own pollution target.

You could write your existing carbon reduction goals into the statutory duties of your agencies. You could set emissions targets for each sector of the economy—transportation, industry, agriculture, utilities, and so on—and then give the appropriate one of your agencies the legal authority to push their sector to its target.

First you would need to pick a pollution number for each sector. The simplest formula would be to require each sector to meet its share of the state’s goals by itself: in Oregon, each sector would have to slash pollution 75 percent below its own 1990 levels by 2050; in Washington, each sector would have to cut pollution 50 percent below 1990 by 2050. If you thought it was unfair to hold each sector to its own 1990 benchmark—maybe because in 1990 Oregon had a nuclear power plant that made that year’s power sector emissions lower than subsequent years—you could instead require each sector to shave some percent below current or forecast emission levels. Or you could set sector pollution limits based on how easy or difficult you think (or you guess? or industry lobbyists tell you?) it will be to move that sector off carbon.

Say you get past that first (difficult) hurdle and choose a number for each sector. Whew. Now you get to pass the buck to the agencies! These are the sectors that generate greenhouse gas (GHG) pollution in Oregon and Washington, and the agencies that you might want to put in charge of each:

  • Electricity: Oregon Public Utilities Commission (OPUC) and Washington Utilities and Transportation Commission (WUTC)
  • Transportation: Oregon Department of Transportation (ODOT) and Washington State Department of Transportation (WSDOT)
  • Industry: Oregon Department of Environmental Quality (ODEQ) and Washington Department of Ecology
  • Agriculture: Oregon Department of Agriculture and Washington State Department of Agriculture
  • Solid Waste (mostly methane from landfills): Oregon Department of Environmental Quality (ODEQ) and Washington Department of Ecology.
Original Sightline Institute graphic, available under our free use policy.

Original Sightline Institute graphic, available under our free use policy.

You would give each agency authority to create new regulations or ramp up existing regulations to make sure it hit the pollution target you set for it. This approach could avoid, for example, the Washington Court of Appeals’ conclusion in Cascade Bike v. Puget Sound Regional Council that the regional planning council was not obligated to reduce carbon pollution. You would make clear that each agency is obligated by law to cut pollution and any agency that fails to do so will have to answer to you and the courts.

Here are some examples of the policies these agencies might enact:

  • The Oregon Public Utilities Commission could increase the state’s renewable portfolio standard from 25 percent to 40 percent or more.
  • The Washington Utilities and Transportation Commission could require utilities to invest more money in energy efficiency.
  • The Oregon Public Utilities Commission could raise the cap on the amount that industrial customers pay towards energy efficiency so that the Energy Trust of Oregon could go after more industrial efficiency projects.
  • The Washington Department of Transportation could require the state’s 14 Regional Transportation Planning Organizations and counties engaged in planning to push compact and transit-oriented development.
  • The Oregon Department of Transportation could require Oregon’s ten Metropolitan Planning Organizations to prioritize increased walkability, bikability, and transit access.
  • The Oregon Department of Agriculture could require dairies to install methane digesters.
  • The Washington Department of Ecology could require local governments to recycle 80 percent of the solid waste stream.

Unfortunately, these agencies might be hamstrung by a lack of authority. You would need to delegate enormous power to the agencies or risk failing to make the pollution cuts that are already enshrined in state law. Here are some examples of the policies that agencies might need you to give them more authority for:

  • Oregon’s Utilities Commission might need the authority to tighten the state’s emissions performance standard.
  • Washington’s Utilities Commission might need the authority to require energy performance disclosures for private buildings.
  • The Department of Transportation might need the authority to impose a VMT tax or other way to price pollution from driving and use the revenue to invest in transit options.
  • The Department of Transportation might need the authority to impose a carbon fee and fund compact development and transportation projects.
  • The Departments of Environmental Quality and Ecology might need authority to implement a product stewardship framework to force manufacturers to take responsibility for their products, cradle-to-grave.

Finally, there are many areas where you would not really be able to hold one agency accountable for a sector’s pollution because there is a mismatch or overlap between agencies and emissions. For example, what authority does the Department of Transportation have over the Regional Planning Organizations? What authority does the Department of Ecology have over local governments’ recycling programs? Here are some examples where the point agency just doesn’t have the power to do what you need them to do:

  • Building codes are an important tool for improving energy efficiency, but the utilities agencies don’t oversee them. The Washington State Building Codes Council, advised by the Washington State Department of Commerce, advises the legislature on changes to the building code. The Washington Utilities and Transportation Commission could only request that the Building Codes Council advise the legislature to improve the code. Similarly, in Oregon, the Building Codes Division develops and adopts statewide building codes. In other words, the Commission in charge of meeting pollution goals would only have the power to beg two other government bodies to make needed changes.
  • Appliance efficiency standards are another tool for getting cheap clean energy by using less electricity to get the same cold beers out of a more efficient fridge. Many appliance standards are out of state hands because they are regulated by the federal government, but for those appliances left to state jurisdiction, the Oregon Department of Energy and the Washington State Department of Commerce are in charge. If the Oregon Public Utilities Commission and Washington Utilities and Transportation Commission were the agencies responsible for hitting a carbon pollution number, they would have to ask the Energy and Commerce departments for help, but would not have the authority to take action themselves.
  • In the transportation sector, the main opportunities for cutting pollution from individuals’ driving (as opposed to trucks moving freight around) are (1) to make cars burn fuel more cleanly, (2) to use cleaner fuels, and (3) to give people better options for getting around without driving as much.
    • In the first category, Oregon and Washington have already taken the critical step of passing a Clean Car Law.
    • In the second category, Oregon and Washington are contemplating a Clean Fuels standard, but you (the legislature) would need to act. If you instead gave an agency sufficiently broad authority to enact a Clean Fuel Standard if it chose to, the agency you would give this authority to would be ODEQ/Ecology. The Departments of Transportation would be dependent on you and ODEQ/Ecology to properly implement a policy that would help meet their responsibilities.
    • The third category requires changes in land-use laws to plan cities around people rather than cars, and funding for transit so people can get around those well-planned cities. A comprehensive state climate package could make the needed changes to land-use planning requirements and dedicate some of the carbon revenue to transit funding. But making the Department of Transportation answer for all transportation GHG pollution in the state is tricky. Land-use planning is under the purview of regional planning bodies and counties and cities, not the state Department of Transportation. You would need to give the Department of Transportation authority over the regional planning bodies (not popular), or make them answer for pollution that they have no control over (not fair).
  • The Washington Department of Ecology—not the Department of Agriculture—regulates air emissions from the agriculture sector and also collaborates with agriculture on water. In Washington, you might want to put Ecology in charge of agricultural emissions, rather than putting the State Department of Agriculture in charge but forcing them to ask for Ecology’s help. (The Oregon Department of Agriculture is responsible for air and water pollution, so you would put Ag in charge).
  • Agencies from different sectors might even work at cross-purposes. For example, electric vehicles can slash pollution from the transportation sector. But OPUC/WUTC, desperately trying to meet the goals you assigned them, might kneecap any attempts to add electricity demand from electric vehicles.

Many of these policies would work better as part of a state-wide climate strategy that you design, rather than developed helter-skelter by a few agencies trying to rise to the (potentially impossible) task of achieving sector-by-sector pollution targets.

Pros:

  • Price certainty of carbon tax, if included.
  • Agency accountability for meeting pollution targets.

 

 

 

Cons:

  • Difficult for legislature to formulate fair targets for each sector.
  • Difficult to give agencies the necessary authority.
  • Agencies working in silos could unwittingly work at cross-purposes.
  • The agency with the responsibility for meeting the goal will need to ask other agencies for voluntary help.
  • Balkanized approach would be less efficient than economy-wide price and could discourage cross-sector technological innovations, like electric vehicles.

 

 

2. You authorize agencies to implement climate policies but do not assign specific pollution targets.

If you can’t pass a statewide cap or tax or sector-based pollution targets (sob) you might fall back on sector-based policies and hope those are enough. Like the scenario above, you would pass a bill requiring all state agencies to reduce GHG pollution to meet the state’s climate goals, but you would not set enforceable targets for each sector. This would be like California’s program, but without the cap to ensure the state actually reduces pollution. The agencies would need to develop and enforce policies designed to move their sectors toward a clean, low-carbon future, but they would not be required to reach a certain pollution target. The big disadvantage of this approach relative to the one above is that, if the state failed to meet its statutory targets, there would be no one to answer for that failure. Not you, not the agencies. There would just be a big state-wide shrug. An important advantage is that you would not be limited to putting a single agency in charge of the entire sector, so you could avoid some of the inter-agency awkwardness described above. Your bill could call out all the relevant agencies mentioned above and ask them to implement whatever policies are within their power to move the state towards its GHG targets.

Pros:

  • Agencies would have authority to implement climate policies.
  • The legislature could tap multiple agencies to work towards climate goals.

Cons:

  • Agencies would not be accountable for meeting pollution targets.
  • Difficult to give agencies the necessary authority.
  • Agencies working in silos could unwittingly work at cross-purposes.
  • Balkanized approach would be less efficient than economy-wide price and could discourage cross-sector solutions, like electric vehicles.

 

 

 

3. One agency to rule them all: you put DEQ/Ecology in charge.

Instead of setting sector-by-sector targets and picking a (possibly impotent) agency to put in charge of each sector, you could put one agency in charge of everything. In Oregon that would be the Department of Environmental Quality, and in Washington the Department of Ecology. Your bill would shift the burden onto ODEQ/Ecology to figure it all out, and give them the authority to order other agencies to toe the line. This would avoid the problem of not being able to pick a single agency for each sector, and would also make someone—namely, ODEQ and Ecology—responsible for getting the state to its climate goals. But other agencies might not appreciate being ordered around by ODEQ/Ecology, and ODEQ/Ecology would not have the in-house capacity and expertise to formulate all the needed policies.

Pros:

  • Agency accountability for meeting pollution targets.
  • ODEQ/Ecology could try to orchestrate a more coordinated state-wide effort.

Cons:

  • Legislature would have to delegate enormous powers to ODEQ/Ecology.
  • ODEQ/Ecology would have to order other agencies around.
  • ODEQ/Ecology would not have the capacity to do everything needed to get the state to its goals.

 

Maybe regulating our way is not the best way.

Many of the policies described above are important pieces of the climate puzzle for Oregon and Washington. But they work best when they fit together. You (the legislature) are in the best position to put together the whole picture. A statewide cap or bumpered tax would make polluters—not state agencies—ultimately responsible for pollution cuts, and an accompanying comprehensive package of policies, coordinated across agencies, would capture low-cost carbon-cutting opportunities. But shifting the onus away from polluters and onto state agencies could create a difficult morass of conflicting motivations and could result in perverse results, like the Public Utilities Commissions fighting against electric vehicles. Asking agencies to cut pollution is better than not cutting pollution at all, but it is not the best option—not by a long shot!—for Oregon and Washington to meet their statutory GHG obligations.

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What Happened When a Hazardous Substance Train Derailed on a Puget Sound Beach

True story from 2011 raises questions about railroad's ability to manage oil trains.
This post is 53 in the series: The Northwest's Pipeline on Rails

If you’ve ever wondered how an oil train derailment might go down on the shores of Puget Sound, it might look a bit like the winter night derailment in 2011 that spilled sodium hydroxide on a beach at Chambers Bay south of Tacoma. It was hardly the kind of disaster that has resulted from oil trains derailing, but it still makes for a rather instructive lesson in how these things happen.

Sodium hydroxide, more commonly known as lye, is used as a chemical base in the production of pulp and paper, textiles, drain cleaners, and other products. (It’s also the major ingredient that makes lutefisk unpalatable.) It’s caustic, corrosive to metal and glass, and it can cause fairly serious burns. You want to be careful handling it but—notably unlike the volatile shale oil traveling daily on the very same rail line—it does not erupt into 300-foot-tall fireballs.

If it had been an oil train, things could have been much, much worse.

What happened is this: around 8 pm on February 26, 2011, a north-bound freight train derailed, sideswiping a south-bound train that was carrying (among other things) four loaded tank cars of sodium hydroxide in a liquid solution. One of those cars was damaged in the collision and leaked a relatively modest 50 gallons onto the beach before response crews plugged the leak. Read more »

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Weekend Reading 11/21/14

How our taxes subsidize traffic congestion; and more.
This post is 181 in the series: Weekend Reading

Clark

A new report from Frontier Group and TransitCenter makes a provocative (and almost certainly true) point: federal tax policy subsidizes traffic congestion. The IRS lets employers offer their employees a tax-free parking subsidy of up to $250 per month—which, by the report’s estimate, boosts national rush-hour traffic by roughly 820,000 vehicles per day. Worse, the tax subsidy for parking focuses the benefits on upper-income Americans—the very people who need the subsidies the least.

Serena

Emily Badger has an excellent write-up of a compelling case that crosses questions of food access, gentrification, justice, and marketing that no doubt resonate in Northwest communities, too: Whole Foods is opening a store in one of Chicago’s poorest neighborhood. In Englewood, one in four adults is unemployed, one in three households lives below the poverty line, and crime rates are among the city’s highest. But Whole Foods has never closed a store, and they don’t expect the Englewood site to be the first. The conversation around the project on the ground, though, is a testy one:

After the groundbreaking over the summer, the Chicago Tribune called the Whole Foods a “socioeconomic experiment,” a phrase that made Mayor Rahm Emanuel and another local alderman, JoAnn Thompson, bristle.

“This is not an experiment. African American people are not an experiment,” Thompson says. “People need to stop thinking like that, that we cannot afford the things that people in other communities have.”

Anna

Sonny Sixkiller, the legendary Cherokee quarterback, is considered one of the University of Washington’s greatest of all time. What would happen if the former NFL player and Seattle resident, who has been outspoken about the Washington Redskins’s offensive name, bought the team himself? That’s the story told in Lummi tribe member Darrell Hillaire’s political satire, “Sonny Sixkiller Buys the Redskins.” In the play, Sixkiller keeps the name as is, but assigns new names to the players instead. Read more »

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The Hero’s Journey: Pro tips from Star Wars

How to win (or lose) the "Story Wars" (Part III).
This post is part of the research project: Flashcards
Your job: Mentor (not hero)

Variations on a basic, familiar story have been told over and over across centuries and cultures, knitting communities together through shared values and beliefs. Joseph Campbell, scholar of religion and mythology, gave us a name for it: the hero’s journey.

The hero’s journey does indeed manifest in all kinds of stories—from creation myths and folk legends to children’s books and blockbuster movies. These are the stories we tell to shape and reinforce how we understand ourselves and our world. These stories can call us to action too, rallying people around a common purpose when things aren’t right. As Campbell put it, when you hear such a story, you respond “Aha! this is my story. This is something I always wanted to say but wasn’t able to say.”

Essentially, the hero’s journey is this: An (often reluctant) hero sees a threat to his—or her—values and what he holds dear. (Think: Luke Skywalker). His world is out of balance. He is not powerful but he is moved to action. He embarks on a quest to make things right. He takes on the villains who pose the threat. And he’s helped along the way by a mentor (think: Yoda) who gives him the tools to succeed (not just lightsaber skills, but confidence—lessons in using The Force). He does it all for the good of his community, not just for himself.

Read more »

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A Mom Rediscovers Her Bike

And begins to get what neighborhood greenways could be.
This post is 14 in the series: Family-Friendly Cities
My bike, complete with a working kickstand, 24 fully functioning gears, and a trail-a-bike hitch.

My bike, complete with a working kickstand, 24 fully functioning gears, and a trail-a-bike hitch. Image by Jennifer Langston

I haven’t used a bike to get across town in six years. I know because that’s how long it’s been since I had a baby.

It wasn’t entirely the baby’s fault—options and resources for family biking in the Northwest have exploded. But having less time, a rotting garage door (now fixed!) and an inconvenient daycare in automobile-choked Amazonia were barriers to using my bike more often.

I’m somewhere on the spectrum between the “enthused and confident” and “interested but concerned” bike user that so many cities are trying to win over. During the pre-baby year I spent in Cambridge, Mass., my bike was a main mode of transportation. Since then, I’ve bought a used Burley trailer, biked recreationally, and occasionally hauled my kid a few blocks to the grocery store or playground. But I assumed Seattle’s bike infrastructure was too unintuitive and stressful to meet my needs for getting around. From my pre-baby days, I recalled bike lanes to nowhere, frequently having to pull over to check a map, not being sure I was in the right place, thinking sharrows were a mean joke, and being thankful if you had a white stripe that separated you from oblivious drivers in cars that were moving pretty fast.

So I was genuinely surprised last week when I discovered it was relatively easy to take a mapless bike ride from my house near Woodland Park to I-5 to Puget Sound, with only a vague goal of testing the two neighborhood greenways in my neck of the woods.

Children give you an easy benchmark by which to measure how much things change. And I can unequivocally say that in the last six years, Seattle’s bike infrastructure has gotten noticeably better for someone like me. In this post, I’m going to focus on neighborhood greenways—a tool that Portland has used widely (which I’ll discuss in a future post) and that Seattle is now banking on to attract left-out bikers, create a family-friendly network of calmer streets, and make the city safer for people of all ages and abilities. Read more »

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The Washington Carbon Emissions Reduction Taskforce Report is Out

Blue ribbon panel says: let’s price carbon!
This post is 23 in the series: Cashing In Our Carbon

Twenty-one Washingtonian leaders from business, labor, public interest, and public health communities and federal, tribal, and local governments walk into a room to discuss the best way to price carbon in the Evergreen State. What comes out after several months? A unanimous report that says: we should do this. With caveats and cautions and needs for more research of course, but the bottom line is that Washington will not achieve its statutory carbon targets without a price, and Washington can design a price—whether a cap or a tax—to protect public health and the economy and make the transition to a post-carbon world.

In April, Governor Inslee established a Carbon Emissions Reduction Taskforce (CERT) to provide recommendations about the design and implementation of carbon pricing in Washington. Today, the 21-member panel—with individuals drawn from business, labor, public interest, and public health communities and federal, tribal, and governments—released its unanimous recommendations. Here is my summary and commentary on their findings.

CERT’s Findings

CERT members unanimously agreed on four findings. Stripping away the cautious consensus wording and hedging (the report says “thoughtful” 15 times in 27 pages), here is my interpretation of those findings, found more in the small print than in the bold headlines:

  1. There isn’t a meaningful difference between a cap and a tax. But if we do either one and do it well, we can inspire other jurisdictions to take action too, making it easier for everyone to go post-carbon.
  2. On the topic of doing it well, Washington needs to carefully design its price to meet the criteria discussed below.
  3. The price should work with complementary policies. In particular, the transportation sector needs an integrated approach with land-use policies, transit oriented development, and alternatives to current single occupancy vehicles such as adequate transit, zero emissions vehicles, and alternative fuel infrastructure. Washington could invest carbon revenue in clean energy and transportation options for a smooth transition to a post-carbon economy.
  4. More analysis is needed, particularly around impacts on businesses and low-income communities.

Read more »

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All the World’s Carbon Pricing Systems in One Animated Map

Plus, answers to decisionmakers' top eight questions about them.
This post is 22 in the series: Cashing In Our Carbon

Oregon and Washington leaders are contemplating turbocharging their clean energy transition by instituting carbon pricing here in the Pacific Northwest. Will a cap or tax on carbon work? Has anyone else ever done this before? Why, yes. Since you ask: Scandinavian countries have been pricing carbon for more than two decades. The European Union Emissions Trading System (EU ETS) has been pricing carbon for almost a decade. US states and Canadian provinces have been pricing for years. Today, there are 39 (1) different programs that collectively put a price on 12 percent of all the greenhouse gas (GHG) emissions in the world. And when China’s national program starts in 2016, almost a quarter of global GHG pollution will carry a price tag to speed the changeover to clean energy. The animated map below shows carbon pricing programs around the world, with the size of the bubbles indicating the amount of pollution priced.

Click to enlarge. Original Sightline Institute graphic, available under our free use policy.

Click to enlarge. Original Sightline Institute graphic, available under our free use policy.

Carbon pricing programs come in many flavors: tax, cap-and-trade, or hybrids, and implemented at the level of country, region, state, or even city. (A fully sort-able table of the programs is at the bottom of this article.) The biggest program is the EU ETS, covering a little less than 2,000 million metric tons (MMT) of GHG emissions, or about 45 percent of all the emissions in the European Union. Japan’s carbon tax is the next biggest player, covering about 800 MMT, or 70 percent of Japan’s emissions. China, with several years of pilot project experience under its belt, is now committed to rolling out a cap-and-trade program in 2016 that will dwarf both the EU and Japan’s programs, probably covering about 5,000 MMT of pollution. For reference: the entire world emits about 36,000 MMT, so China’s program alone will price about 13 percent of global emissions. To get a sense of how the carbon pricing programs relate to global emissions, the map below shows the world’s biggest polluters. (You can also see countries re-sized by emissions here.) The US has a conspicuous mismatch between its large red pollution bubble and the lack of a green price bubble. President Obama, not to be outdone by the Chinese, has announced an agreement with China to cut carbon pollution. However, new Congressional leadership has vowed to move in the opposite direction by delaying and undermining federal efforts to cut pollution.

Original Sightline Institute graphic, available under our free use policy.

Original Sightline Institute graphic, available under our free use policy.

Here are a few questions about global carbon pricing programs that Pacific Northwest leaders might want answered: Read more »

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Event: Will a Carbon Tax Fly in Oregon?

Kristin Eberhard and the Corvallis League of Women Voters talk carbon cash.
This post is 21 in the series: Cashing In Our Carbon

Next Thursday, join our senior researcher Kristin Eberhard to talk about carbon pricing possibilities for Oregon. The League of Women Voters of Corvallis is hosting a public forum with a great panel of speakers to lay out some smart climate policy for the Beaver State. Joining Kristin will be Jeff Renfro, senior economist at Portland State University’s Northwest Economic Research Center (NERC); Jenny Liu, assistant director at NERC; and Nancy Shurtz, professor at University of Oregon’s law school. There will be a Q&A following the panelists’ remarks, so bring a notebook and some hard questions, because this crew can definitely accommodate.

  • When: Thursday, November 20, 2014, 7 p.m.
  • Where: OSU Linus Pauling Science Center, Room 125 (map)
  • Tickets: The event is free and open to the public, no pre-registration required.
  • Host: League of Women Voters of Corvallis, Oregon

For more information, visit LWV Corvallis’s Facebook page.

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Weekend Reading 11/14/14

The junk mail-killing app; from the same program that brought you Solyndra, a $5B win for taxpayers; and more.
This post is 180 in the series: Weekend Reading

Alan

You probably don’t think you want to read a six-page account of the Washington State budget, with charts and tables and citations, and if you’re not a resident of the state, you’re probably right. But if you are resident, you’re mistaken. State Representative Ross Hunter has written a compelling and understandable article about this year’s budgetary imponderables that illuminates and makes real the Abrahamic choices facing the legislature. It’s full of concrete, understated, revealing sentences like this: “The Supreme Court says that we can’t keep mentally ill people in shackles in emergency room hallways.” Read it.

Patton Oswalt and Werner Herzog act out regulatory capture and 19 other short films that amusingly distill key economic issues. It’s We The Economy, a project of Paul Allen’s movie production company.

Know how I hate junk mail? Here’s the latest killer app (literally) for paper spam.

I like to read about brain science. It makes me feel like I’m in a fun house hall of mirrors: infinite loop. Our brains studying themselves, gazing ever deeper, still mystified but making out ever smaller replicas. Here’s one from the NYT. Read more »

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The Money Behind Northwest Coal Exports

Ambre Energy's financial backer makes money by finding a bigger sucker.
This post is 27 in the series: Coal Exports: Caveat Investor
Copyright Paul K. Anderson, used with permission

Copyright Paul K. Anderson, used with permission

If you’ve been following the Northwest coal export debate, you’ve probably heard of Ambre Energy—the struggling Australian firm that’s behind two of the three remaining coal terminal proposals in Washington and Oregon. Ambre made headlines back in August, when the state of Oregon denied a key permit for the company’s proposed Morrow Pacific coal terminal project on the Columbia River.

But even if you’ve heard of Ambre, you may not have heard of the company’s main financial backer: a tight-lipped private equity firm called Resource Capital Funds (RCF). Focused on minerals investments, RCF has a truly global reach: it’s registered in the Cayman Islands; maintains offices in Denver, New York, Toronto, and Perth, Australia; and invests in mining and minerals projects all over the world. With more than $100 million at stake with its investment in Ambre, RCF has become the chief financial backer of Northwest coal exports.

And while you might think that having the backing of a global investment firm like RCF would be a sign that Ambre is a solid company with strong financial prospects, you’d actually be mistaken. A review of the firm’s past investments shows that RCF actively seeks out risky projects with a high potential for failure.

Read more »

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