Oregon environmental regulators are concerned that the state’s largest natural gas utility is misinforming customers about a key climate change policy aimed to reduce greenhouse gases.
NW Natural, which provides natural gas to more than 2 million people in Oregon and southwest Washington, told its customers in a newsletter this month that the state is proposing a carbon crediting program that might not lead to direct greenhouse gas emission cuts.
This is untrue, according to the Oregon Department of Environmental Quality.
“The fundamental purpose of the Community Climate Investments is to support projects that reduce greenhouse gas emissions in Oregon,” Lauren Wirtis, a spokesperson for DEQ, said in an email.
NW Natural did not respond to a request for more information Monday.
The carbon credits, called Community Climate Investments or CCIs, are part of the state’s landmark Climate Protection Program that was first passed in 2021 but is being reworked this year following a judicial ruling in a lawsuit. NW Natural and two other natural gas companies filed the suit to derail the protection program, which includes emission reduction goals.
Under the climate program, the state would sell the carbon credits to fossil fuel companies in Oregon to help them offset some of their greenhouse gas emissions and meet the state’s emission targets. The state, with its suite of climate laws, is attempting to reach a 50% reduction in greenhouse gas pollution by 2035 and a 90% reduction by 2050 to confront the growing threat of climate change. The Environmental Quality Commission will vote on whether to approve the new Climate Protection Program by the end of the year.
Money from the sale of each carbon credit would be invested in projects that reduce emissions in Oregon. One credit would be equal to one metric ton of carbon dioxide released into the atmosphere, and companies could buy them for $129 per credit.
Credits would equal emission cuts
But in its newsletter, NW Natural claimed that this was not the case.
“In its carbon accounting, DEQ will include CCIs as emissions savings even if a project has not reduced emissions,” it reads. The sale of carbon credits, the newsletter claims, “could – but are not required to – result in emissions reductions at some point in the future.”
In an email, Wirtis cited three provisions of the draft Climate Protection Program showing that each credit the state sells would have to be commensurate with a metric ton of carbon dioxide that is not released into the atmosphere. The $129 cost per credit, described in the NW Natural newsletter as “the most expensive in North America,” includes a 4.5% fee so DEQ can pay for audits of all projects to ensure each credit reduces greenhouse gas emissions. DEQ would report compliance to the Environmental Quality Commission every two years.
The price per Oregon credit is about six times higher than the average cost of a credit on unregulated carbon markets, and about 1.5 times the price of average credits in state-run markets in California, Washington and British Columbia, Canada.
Only projects that reduce emissions, such as weatherizing buildings, heat pump or solar panel installations, or buying electric vehicles or vehicle chargers would get money from the sale of credits, according to DEQ officials. Credit recipients, largely nonprofits working on community-based projects, would be the beneficiaries in charge of executing the work.
“DEQ developed this model rather than allow companies to select their own offset projects, to better guarantee that Oregon communities will be involved in project development, will directly benefit from projects by reducing co-pollutants and so more communities could benefit from investments that support the transition to cleaner fuels and technologies,” Wirtis said.
In its newsletter, NW Natural officials also warned that residential rates could go up as much as 14% in the first year that the climate program is implemented if passed, and 35% within the next decade. A footnote says the projection is based on average customer usage and average weather conditions for customers.
Charlotte Shuff, a spokesperson for the watchdog group Citizens’ Utility Board, said it’s hard to know how accurate that might be without analyzing the data the company is using.
“It’s really hard to speak to how true the rate impacts are that NW Natural is referencing,” she said via email. “We have seen a trend in the past of NW Natural inflating the impact of customer costs. They’ve done it in communications to customers. They’ve done it in presentations to legislators.”
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