Today's decisions by oil giants BP and ConocoPhillips to pull out of the U.S. Climate Action Partnership along with equipment maker Caterpillar wiped some big names off the roster of the influential industry-environment partnership. But those moves also may give the group more freedom to take stronger positions as it lobbies Congress.
USCAP has been a powerful force on Capitol Hill over the past year. Its members have advised President Obama, and the group provided the blueprint used by Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.) as a foundation for the American Clean Energy and Security (ACES) climate bill passed by the U.S. House last spring.
However, USCAP also works on a consensus basis, which means compromises as it pushes for congressional action on cap-and-trade.
With a member list that include utilities, mining companies, industries and oil companies (Shell remains a member of the group), as well as leading environmental organizations NRDC and Environmental Defense Fund, consensus isn't easy.
USCAP’s position on coal, for example, reflects its utility members’ concerns by encouraging development of carbon capture and storage and other advanced coal technologies — a position the Obama administration has fully embraced and several environmental groups oppose.
ConocoPhillips and BP both said in explaining their decisions to leave the group that the climate legislation being discussed in Congress now doesn’t conform to the blueprint the group provided when it comes to transportation fuels, and they argue that too large a share of the costs would fall on the transportation sector. Coal supporters have won so many concessions in the writing of legislation, they've tipped the balance.
“House climate legislation and Senate proposals to date have disadvantaged the transportation sector and its consumers, left domestic refineries unfairly penalized versus international competition, and ignored the critical role that natural gas can play in reducing GHG emissions," ConocoPhillips CEO Jim Mulva said in announcing his company’s decision to pull out of USCAP.
"We believe greater attention and resources need to be dedicated to reversing these missed opportunities, and our actions today are part of that effort. Addressing these issues will save thousands of American jobs, as well as create new ones."
It’s an ongoing complaint that the oil giants have been trying to remedy. In November, The Hill reported on a document circulated internally in USCAP by oil companies to change how transportation emissions were treated under climate legislation. That plan would shift more of the burden from refiners directly to consumers with a consumer fee on transportation fuels linked to the market price on carbon. The plan was apparently never accepted by the group.
At the same time, all three oil companies are members of the American Petroleum Institute, which has been outwardly fighting cap-and-trade legislation, including organizing astroturf “Energy Citizens” rallies last summer that led Greenpeace to call for Shell and BP to drop their API memberships.
Instead, BP and ConocoPhillips announced today that they would not renew their memberships in USCAP.
ConocoPhillips said in its announcement that it would focus on “expanding opportunities for greater near-term GHG reductions through increased use of natural gas.”
Did USCAP Change Big Oil?
When it joined USCAP in April 2007, ConocoPhillips announced that it supported a mandatory national framework to address greenhouse gas emissions:
“We recognize that human activity, including the burning of fossil fuels, is contributing to increased concentrations of greenhouse gases in the atmosphere that can lead to adverse changes in global climate,” Mulva said then. “While we believe no one entity can alone address the environmental, economic and technological issues inherent in any solution, ConocoPhillips will show leadership in finding pragmatic and sustainable solutions.
“Any such framework should be transparent, clearly communicate the cost of carbon to consumers, be structured to avoid increasing the volatility of energy prices, and encourage energy efficiency.”
The same day that ConocoPhillips made that announcement, Trillium Asset Management withdrew a shareholder resolution that would have pressured the company to invest more in developing low- and zero-carbon technologies. Trillium officials said they were encouraged by ConocoPhillips' announcement and a pledge from Mulva that more efforts were under way, though they still wanted to see more commitment to research and development of renewable energy.