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Cap-and-Trade
Oregon CPP Scenario Simulator v1.0
Thursday, 6th March 2025
cCarbon's Oregon CPP Scenario Simulator uses our Oregon CarbonOutlook Demand-Supply model to provide a tool to calculate compliance outcomes for all entities in the market till 2045, namely natural gas suppliers, fuel suppliers, EITES, and DNG entities. The Oregon Climate Protection Program establishes a declining emissions cap that applies across multiple sectors of the economy, with compliance obligations structured through the allocation of Compliance Instruments and the use of Community Climate Investment Credits. As the program expands over time to cover additional entities, the need for forward-looking modelling becomes critical for understanding how emissions trajectories translate into compliance obligations and how sector-specific decarbonization pathways influence the balance between instrument supply and demand. The simulator enables market participants to assess how emissions reduction trajectories evolve over successive compliance periods and how variations in decarbonization rates influence the accumulation or drawdown of Compliance Instrument balances within the program. By incorporating sector-specific emissions pathways, the model allows users to evaluate how different assumptions regarding fuel switching, electrification, and operational efficiency affect compliance exposure across covered entities. The simulator allows the user to tweak rates of decarbonization, use fuel volumes from our OR CFP Carbon Outlook Model or use custom ones, and accordingly calculate outstanding compliance obligations and the bank in the program. This flexibility enables users to evaluate multiple policy-consistent and market-driven scenarios, including variations in renewable fuel adoption rates, changes in transportation fuel demand, and adjustments to natural gas consumption patterns. Fuel suppliers represent a central driver of emissions reductions within the program, particularly through the increased use of renewable diesel and the expansion of electric vehicle adoption, both of which influence lifecycle emissions intensity of fuels supplied into the market. Natural gas utilities face a different decarbonization pathway, where emissions reductions may occur through efficiency improvements, fuel substitution, or demand-side changes that influence consumption patterns over time. EITEs and DNG entities introduce additional complexity into modelling assumptions, as their emissions trajectories may be influenced by industrial output levels, technology adoption timelines, and sector-specific operational characteristics. By allowing users to modify emissions reduction rates across sectors, the simulator enables a detailed understanding of how compliance obligations evolve under different economic and policy conditions. The long-term horizon of the simulator through 2045 reflects the multi-period structure of the Oregon Climate Protection Program, where declining emissions caps progressively tighten the availability of Compliance Instruments. Over time, the interaction between emissions reductions achieved by covered entities and the availability of Compliance Instruments determines the size of the program bank and the level of outstanding compliance obligations. The ability to adjust fuel volumes using inputs derived from the Oregon Clean Fuels Program Carbon Outlook Model provides consistency between fuel consumption projections and emissions intensity assumptions across regulatory programs. Alternatively, users may input custom fuel demand trajectories to reflect internal forecasts, operational expectations, or alternative macroeconomic conditions. This flexibility ensures that the simulator can be used both for standardized scenario evaluation and for customized compliance planning exercises. As the Oregon CPP evolves to include additional covered entities in subsequent compliance periods, modelling tools play an important role in helping market participants understand how phased coverage expansion influences overall program balance. The simulator provides insight into how the inclusion of EITEs and smaller fuel suppliers may affect aggregate emissions coverage and compliance demand growth over time. By integrating decarbonization rate adjustments, fuel consumption pathways, and sector-specific emissions trajectories, the Oregon CPP Scenario Simulator provides a structured analytical framework for evaluating compliance outcomes under a range of plausible future conditions. The resulting outputs allow users to assess the evolution of outstanding compliance obligations and the accumulation or drawdown of Compliance Instrument balances across the duration of the program, supporting strategic planning and long-term compliance preparation within the Oregon Climate Protection Program.