Oregon Department of Energy

Revised July 2010

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Oregon’s

Carbon Dioxide Emission Standards

For New Energy Facilities

In 1997, the Oregon Legislature enacted a standard for emissions of carbon dioxide (CO2) from 

base load electric generating plants fueled by natural gas (HB 3283). In addition, the legislation 

authorized the Oregon Energy Facility Siting Council (Council) to adopt carbon dioxide emissions 

standards for other fossil-fueled power plants. This landmark legislation was the first of its kind in the 

United States. Since 1997, the Council has adopted standards for carbon dioxide emissions from baseload gas plants, non-base load power plants, and nongenerating energy facilities that emit CO2.

Applicants for site certificates for the types of energy facilities that are subject to a carbon dioxide 

standard must demonstrate compliance with the applicable standard.

The statutory authority for the CO2 standard is found in ORS 469.503. The standards and 

applicable rules are found in the Oregon Administrative Rules, Chapter 345, Division 24.

For base load gas plants and non-base load plants, the current standard is a net emissions rate of

0.675 pounds of CO2 per kilowatt-hour of net electric generation (lb. CO2/kWh). For nongenerating 

facilities, the rate is 0.504 pounds of CO2 per horsepower-hour. The standard for base load gas plants 

applies only to natural gas-fired plants. The standards for non-base load plants and nongenerating 

facilities apply to all fuels. As described below, the rules allow for hybrid configurations that combine 

base load with non-base load operation. The Council has not set CO2 emissions standards for base-load 

power plants that use other fossil fuels. 

The Council’s CO2 emission rules are divided into specific standards for each of the three 

categories of facilities. The major differences among the standards are in how the rules account for the 

capacity factors and variations in the operation of the facilities. The discussion below will address first 

how the Council forecasts and tracks the gross and net CO2 emissions for each of the categories of 

facilities. Then it will explain methods of compliance with the standards: offset projects and the 

monetary path. 

Note: The following discussion distinguishes between an applicant for a site certificate and a 

certificate holder. These are stages in the process of building an energy facility. Applicants have to 

demonstrate that a proposed facility meets the applicable standard in order for the Council to grant a 

site certificate. Certificate holders have to comply with site certificate conditions related to the 

standard as they construct and operate their facilities. 

Specific Standards for Generating Facilities 

Base Load Gas Plants 

The CO2 emissions standard for a base load, natural gas-fired power plant (“base load gas 

plant”) is a net emissions rate of 0.675 lb. CO2/kWh of net electric power output. The Council’s 

definition of a natural gas-fired facility allows up to 10 percent of the expected annual energy use to be 

provided by an alternative fuel (typically, distillate fuel). 

The statute established the initial standard for base load gas plants at 0.70 lb. CO2/kWh. The 

statute allows the Council to modify this standard so that the net emissions rate remains 17 percent 
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below the most efficient base-load gas plant operating in the United States. The statute specifies 

principles the Council must “consider and balance” when making changes to the standard or when 

adopting new standards for other types of fossil-fueled power plants.

In January 2000, the Council modified the CO2 standard for base load gas plants. At that time, 

the most efficient operating base load plant had a heat rate of 6,955 Btu/kWh (HHV). The modified

standard was determined by applying a heat rate 17 percent lower (5,773 Btu/kWh). Using an

emissions rate of 117 pounds of CO2 per million Btu of natural gas fuel, the net emissions standard was 

set at 0.675 lb. CO2/kWh.

The standard provides an incentive for site certificate applicants to propose a facility that has 

the lowest heat rate possible using state-of-the-art technology—that is, a more efficient plant. Building 

a more efficient plant would go partway in meeting the standard, but manufacturers do not offer 

technologies that could meet the standard solely through efficiency. To make up the difference, an 

applicant must meet the net emissions standard through carbon dioxide offsets.

Non-Base Load Power Plants 

The CO2 emissions standard for a non-base load power plant, regardless of fuel, is a net 

emissions rate of 0.675 lb. CO2/kWh of net electric power output. Because non-base load power plants 

are likely to use single-cycle turbines, the standard is about 40 to 45 percent below the typical 

emissions of such plants currently in operation, if they are using natural gas.

Power Augmentation 

The Council’s rules allow for a base load gas plant with power augmentation (a hybrid plant) to 

meet separate standards for the two modes of operation. The rule applies only to power augmentation 

technologies that increase both the capacity and the heat rate of the plant, such as duct burning. The 

base load operation must meet the base load gas plant standard, and the power augmentation operation 

must meet the non-base load standard. 

The Council rules account for technologies that allow a base load gas plant to be operated in a 

base load manner under usual conditions but to increase capacity for short periods when needed to 

meeting peaking requirements. There are two major differences between the rules for the two types of 

plants: the annual hours of operation and one-time versus periodic reporting requirements. These are 

explained below. 

Forecasting and Tracking CO2 Emissions 

The rules account for the different operational characteristics of base load and non-base load 

plants. Non-base load plants are peaking (or “load-following”) plants. 

Base-Load Gas Plants without Power Augmentation 

If a base load gas plant does not employ power augmentation technologies, the Council 

determines the gross CO2 emissions that are reasonably likely to result from the operation of the 

facility based on the proposed design of the facility. The Council calculates gross CO2

emissions by assuming a 100-percent capacity factor and a 30-year life of the plant, as specified 

in statute. Other than the single test on a new and clean basis, described below, the Council 

does not track the actual emissions of the operating plant.
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Base-Load Gas Plants with Power Augmentation 

If a base load gas plant employs power augmentation technologies, the Council determines the 

gross CO2 emissions in an additive fashion for simplicity. The Council calculates gross CO2

emissions by assuming a 100-percent capacity factor and a 30-year life of the plant for the 

number of hours the plant is not using power augmentation and then adds those emissions to the 

emissions calculated for the hours when the plant is using power augmentation (for a total of 

8,760 hours annually). The Council follows the non-base load procedure (described below) to 

calculate emissions for the hours the plant will operate with power augmentation.

Non-Base Load Power Plants 

The Council determines the gross CO2 emissions that are likely to result from the operation of 

the facility based on the proposed design of the facility and the average annual hours of 

operation. The applicant specifies the annual hours it proposes to operate the plant. 

The rules define a non-base load plant as a fossil-fuel generating facility that is limited by the 

site certificate to an average of not more than 6,600 hours of operation annually. This is a 75-

percent capacity factor. The rules treat a facility that would operate more than 6,600 hours 

annually on average as a base-load plant at 100-percent capacity. 

As with base load gas plants, the rules specify a 30-year analysis period for determining gross 

emissions, unless an applicant requests a shorter operational life for the facility. The rules 

require testing on a new and clean basis during the first year of operation, but allow 

modifications to the testing procedure for technical and operational considerations. The rules 

require that the results be adjusted for average local conditions during the times of the year 

when the facility intends to operate. 

The rules provide a check on the actual operation of the non-base load power plants to ensure 

that they meet the limitations on their hours of operation. Every five years after the plant begins 

operation, the certificate holder must report to the Council the plant’s actual hours of operation. 

If the actual emissions (calculated using the actual hours of operation and the heat rate on a new 

and clean basis) exceed the projected emissions prorated for a 5-year period, the certificate 

holder must offset the excess emissions using the monetary path (described below). The rules 

apply the present value of the monetary path offset rate for the year in which the Council first 

granted the site certificate. If the plant’s emissions of CO2 were less than the prorated amount in 

previous 5-year periods, the Council will credit the certificate holder with the “unused” 

emissions to determine the net amount of emissions the certificate holder must possibly offset 

in future reporting periods.

In addition to requiring the certificate holder to offset excess emissions from previous 

operations, the rules require the Council to recalculate the projected emissions for the facility 

based on the average hours of operation during the 5-year period in which it exceeded its 

limitation on hours of operation. The Council will project emissions for the years remaining in 

the deemed 30-year life of the plant. The certificate holder must also offset these additional 

projected emissions at the present value of the monetary path offset rate. The rules look only at 

the previous 5-year period when calculating future emissions. There is no credit for earlier 5-

year periods in which the plant may not have operated at the full capacity allowed by the site 

certificate. 
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The purpose of these rules is to remove the incentive for an applicant to propose fewer hours of 

operation than are likely to occur so as to avoid having to provide full offsets prior to beginning 

construction, when the plant will actually operate as a base load power plant. If the average 

annual hours of operation ever exceed 6,600, the rules require the Council to treat the facility as 

a base load plant operating 8,760 hours annually for the remainder of the 30 years.

In 2009, the Council amended the definition of a “non-base load power plant” to allow for 

facilities that are designed to operate at variable load in response to the variable output from 

renewable generation such as wind or solar generating facilities. Under the amended definition, 

the annual hours of operation may be determined by dividing the actual annual electric output 

of the facility (megawatt-hours) by the facility’s nominal electric generating capacity 

(megawatts). The Council amended the CO2 emissions standard for non-base load power plants

(OAR 345-024-0590) to allow the operators of variable power generating plants to report and 

offset CO2 emissions based on actual measured emissions, as an alternative to calculating 

emissions from hours of operation. The amendment allows the operator to report actual carbon 

dioxide emissions consistent with any mandatory carbon dioxide emissions reporting required 

by the Oregon Department of Environmental Quality or the United State Environmental 

Protection Agency.

New and Clean Basis 

The Council will specify site certificate conditions to ensure that a generating plant does not 

exceed the predicted CO2 emissions on a “new and clean basis.” The rules define the phrase “new and 

clean basis,” including test conditions and allowing for flexibility of testing procedures. The rules 

require a 100-hour test that the facility must conduct during its first year of operation. The rules allow 

the certificate holder to use the commercial acceptance test to meet this requirement. If the facility fails 

to meet the predicted CO2 emissions rate, the certificate holder must offset any excess emissions. The 

rules allow flexibility of the “new and clean basis” testing procedure for non-base load plants or power 

augmentation. 

Flexibility 

The Council determines compliance with the CO2 standard based on the proposed design of the 

facility, but it may be years before the facility is built. The rules give the certificate holder flexibility in 

selecting equipment and defining certain operational parameters at the time it decides to build the 

facility. The rules allow a certificate holder to certify the final heat rate and capacity of the facility 

based on its contract with suppliers. The certificate holder can vary these elements within limits 

specified in the rules and the site certificate. 

Reducing CO2 Emissions through Cogeneration 

An applicant for a generating facility may meet the CO2 emissions standard through 

cogeneration that will offset fossil fuel emissions that would have otherwise occurred. It is possible for 

an applicant to meet the standard and offset all excess CO2 emissions through cogeneration alone. The 

Council will evaluate the reduction of net CO2 emissions from cogeneration and determine the likely 

reductions over 30 years. If the Council credits an applicant with CO2 offsets from cogeneration, the 

site certificate will include conditions that guarantee the certificate holder provides the projected 

emission reductions. 
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Specific Standards for Nongenerating Facilities 

Although many types of nongenerating facilities may fall under the Council’s jurisdiction, the 

most likely application of the CO2 standard will be for compressors at underground natural gas storage 

facilities. Therefore, the standard is expressed as a rate of emissions per horsepower hour: 0.504 lb. 

CO2/hp-hr. This is equivalent to the power plant standard of 0.675 lb. CO2/kWh. 

In applying this standard, the Council estimates the total CO2 emissions from the facility to 

determine the appropriate schedule for increments of emission offsets that the certificate holder should 

provide. To account for the high variability in the workload of a compressor, the rules do not require 

the certificate holder to provide offsets according to a one-time estimate of gross CO2 emissions. The 

rules also allow the Council to determine that the life of the facility may be less than 30 years. 

The certificate holder must provide a certain amount of offsets in advance. These offsets make 

up an offset credit account that the certificate holder may then draw down based on actual emissions. 

The Council sets the schedule for providing offsets by considering the potential gross emissions and 

the need to provide offsets in amounts sufficient to develop effective offset projects. 

The Council may require the certificate holder to provide offsets in any increment of the 

estimated total offsets needed. In any case, before the account is exhausted, the certificate holder must 

replenish it with additional offsets up until the end of the analysis period. The applicable offset rate is

the present value of the offset rate in effect on the date the Council issued the site certificate. 

Summary

Base-load gas plant:

Net emissions rate: 0.675 lb. CO2/kWh, with verification of emissions rate 

during the first year of operation

Annual hours of operation: 8,760 hours (100 % capacity)

Time-frame for analysis: 30 years

Non-base load power plant: 

Net emissions rate: 0.675 lb. CO2/kWh for all fuels, with verification of

emissions rate during the first year of operation and 

accounting every five years for emissions based on 

reported hours of operation and the new and clean 

emissions rate.

Annual hours of operation: Up to 6,600 hours (75 % capacity)

Time-frame for analysis: 30 years

Nongenerating energy facilities:

Net emissions rate: 0.504 lb. CO2/horsepower-hour.

Annual hours of operation : Not applicable. The Energy Facility Siting Council 

specifies the amount of offsets the certificate holder must 

provide to an offset credit account prior to beginning 

construction, and then the certificate holder replenishes 

the offset credit account based on actual emissions as 

directed by the Council.

Time-frame for analysis: 30 years, unless the Council specifies a shorter period.
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Reducing CO2 Emissions through Offset Projects 

An applicant has two alternatives for meeting a CO2 standard through offset projects: 

1) The applicant may implement projects directly or through a third party; or,

2) The applicant may use the “monetary path.”

The statute defines an “offset” as an action that will be implemented by the applicant, a third 

party or a qualified organization to avoid, sequester or displace CO2 emissions. The future tense of the 

definition limits offsets to new projects. There are no limitations on the geographic location or types of 

CO2 offset projects. 

Applicant-Sponsored Offset Projects 

An applicant may propose offset projects that it or a third party (on contract to the certificate 

holder) will implement. The Council will determine the quantity of CO2 emission reductions 

reasonably likely to occur from each project. To do so, the Council must consider: 

1) The certainty that the projected offsets will be achieved.

2) The ability of the Council to determine what reductions actually result from the

project, based on the monitoring and evaluation the applicant proposes.

3) The extent to which the CO2 reductions would have occurred anyway in the absence of

the offset project.

The rules specify the information that an applicant must provide. They also provide specific 

criteria the Council must consider and the findings that the Council must make in order to determine 

that a proposed offset project meets the standard. 

The Council’s evaluation may ultimately take place as part of a quasi-judicial, contested case 

proceeding, which is part of the process for reviewing every application for a site certificate. The 

Council will adopt site certificate conditions to ensure that the proposed projects are implemented; 

however, the Council may not require that the applicant guarantee that it will achieve the predicted 

CO2 offsets from these projects. The rules require the site certificate holder to begin to implement the

offset projects before beginning construction of the energy facility. 

The statute prohibits the Council from allowing credit for offsets that have already been 

allocated or have been awarded CO2 reduction credits in another regulatory setting. Neither the law nor 

the rules specifically addresses carbon trading. Nevertheless, a certificate holder cannot trade the CO2

offsets that the Council requires it to provide to meet the CO2 standard. The Council holds in trust the 

CO2 offsets that the certificate holder provides to comply with the Oregon CO2 standard.

Monetary Path 

Applicants may elect to pay a standard dollar amount per ton of CO2 as a way to meet the 

standard. The amount is established by administrative rule and is currently $1.27 per short ton of CO2. 

The Council may, by rule, adjust the monetary offset rate based on empirical evidence of the actual 

cost of CO2 offsets and by making a finding that meeting the standard through the monetary path will 

be economically achievable for natural gas-fired power plants. The Oregon statute, however, provides 
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that the Council may not adjust the rate by more than 50 percent (increase or decrease) during any twoyear period. The Council last adjusted the monetary offset rate in May 2007.

If an applicant elects to use the monetary path, the Council will determine the amount of 

emission reduction needed to meet the standard and will calculate the amount of offset funds the 

certificate holder must provide to a “qualified organization.” The certificate holder must provide a 

bond or letter of credit for the required amount before beginning construction of the energy facility. 

The rules require the bond or letter of credit to equal the present value of the calculated offset funds 

based on the rate in effect at the time the Council granted the site certificate. 

When the certificate holder has provided the funds specified in the site certificate conditions in 

the manner required, it will have fulfilled its obligation to meet the CO2 standard. The monetary path 

allows an applicant to avoid having to prove the projected CO2 offsets from specific projects. It gives 

the certificate holder certainty about what it will cost to comply with the standard, and it allows the 

certificate holder to avoid having to develop and manage offset projects itself. 

Site Certificate Holder’s Financial Responsibilities under the Monetary Path 

The certificate holder is responsible for two types of payments under the monetary path: 

1) The offset funds, which are calculated at $1.27 per short ton of CO2 emissions in excess of 

the standard.

2) Selection and contracting funds. 

The selection and contracting funds compensate the qualified organization for its cost of 

selecting and contracting for the implementation of offsets. To the extent these funds are not needed for 

administrative functions, the qualified organization may also use these funds to purchase offsets. The 

selection and contracting funds are additional to the offset funds and are comparable to costs the 

certificate holder would have incurred directly, had the certificate holder opted to comply with the CO2

standard by implementing offset projects on its own. 

The selection and contracting funds are equal to 10-percent of the first $500,000 of offset funds 

and 4.286-percent of the offset funds above $500,000. A base load gas plant must pay a minimum of 

$50,000 unless the Council specifies a lesser minimum. On smaller projects or for additional payments, 

the Council’s practice has been to require 20-percent of the first $250,000 of offset funds and 4.286-

percent of the offset funds above that amount. 

The Council will specify in the site certificate how a certificate holder must disburse funds to 

the qualified organization. The certificate holder must pay the selection and contracting funds to the 

qualified organization prior beginning facility construction. The certificate holder must pay the total 

offset funds the qualified organization upon request when the qualified organization notifies the 

certificate holder that it has a contract to implement an offset project. Once a certificate holder has 

provided offset funds, the rules do not permit a refund. 

Use of Offset Funds 

The qualified organization must use at least 80 percent of the offset funds for contracts to 

implement offsets directly. The rules define offsets as any action that will avoid, sequester or displace 

CO2 emissions. The qualified organization may use up to 20 percent of offset funds for monitoring, 

evaluation, administration and enforcement of contracts to implement offsets. The rules also require a 
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qualified organization to obtain the offsets in a timely manner and regularly to report its activities to 

the Council. 

Qualified Organization 

The monetary path relies on a “qualified organization” to implement offset projects. The statute

sets the qualification criteria for an independent, non-profit organization that may administer the 

monetary path (ORS 469.503(2)(e)(K)). Neither the statute nor the Council’s rules name or establish a 

specific organization. 

To be a “qualified organization,” an organization must meet several criteria, including that it be 

exempt from federal taxation under section 501(c)(3) of the Internal Revenue Code. The qualified 

organization’s decisions on the use of offset funds must be made by a decision-making body composed 

of three members appointed by the Council, three members appointed by an environmental non-profit 

organization, and one member appointed by applicants for site certificates that are subject to the 

monetary path. A certificate holder that has provided funds to the qualified organization holds a nonvoting seat on the board when the qualified organization is selecting and contracting for projects with 

the certificate holder’s funds. 

The Climate Trust 

The Climate Trust has been created independently and is currently the only qualified 

organization. It was formed in accordance with the criteria in the law, and its board membership meets 

the requirements of the law. It is incorporated in Oregon and has federal nonprofit 501(c)(3) tax status. 

For information about The Climate Trust, contact: The Climate Trust, 65 SW Yamhill Street, 

Suite 400, Portland, OR 97204 (telephone: 503-238-1915) or visit the website at 

http://www.climatetrust.org/.