Oil Giants BP, ConocoPhillips Drop Out of US Climate Action Partnership

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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.

Asked today if ConocoPhillips had lived up to Trillium’s expectations in the almost three years since that announcement, Trillium Vice President Shelley Alpern’s response was quick:

“No, quite the opposite.”

Big oil’s continued fierce opposition to the climate bill is tremendously disappointing, she said. In the case of ConocoPhillips, the company is still pushing for a dominant position in the Canadian tar sands, one of the most carbon-intensive fuels in use. Trillium has been involved in several shareholder efforts to encourage more environmentally friendly practices by the oil giants.

The oil industry clearly does see that the public wants cleaner energy sources — it shows in how the industry attempts to burnish its image with ads about green energy, she noted. But those investments are generally a minute fraction compared to what they are putting into fossil fuel.

“They need to see themselves as energy companies and branch out with their investments” by looking beyond petroleum, and that’s going to take a change in attitude that hasn’t happened yet, Alpern said.

“Five years ago, you could have said there was hope. Now, they seem as dug in as ever. That probably reflects an internal struggle within these companies. It certainly seems that way at BP after John Browne resigned. Why the more conservative voices are winning out right now, I’d like to know."

Conservative voices were quick to celebrate the companies’ decisions to withdraw from USCAP. Freedom Action Director Myron Ebell declared the resignations to be “the first recognition by the many major corporations pushing energy-rationing legislation that cap-and-trade legislation is dead in the Congress and that the scientific case for global warming alarmism is collapsing rapidly.”

“While these announcements are most welcome,” Ebell said, “they do not mean that we can relax our efforts to defeat and roll back energy-rationing legislation and regulation” — including EPA regulation of greenhouse gas emissions under the Clean Air Act, higher fuel economy standards for new passenger vehicles, and bills in Congress to require more renewable energy use and energy efficiency.

Climate Bill’s Future

Climate legislation got bogged down in the Senate last year as health care reform took precedence and then as the international climate conference at Copenhagen failed to produce a legally binding deal. Public attacks on climate science by anti-climate action groups and conservative commentators have created more challenges for climate action supporters.

Still, NRDC sees potential for a climate bill on Capitol Hill this year, spokesman Michael Oko said. He sees positive signs from Sens. John Kerry (D-Mass.) and Lindsey Graham (R-S.C.), who are working on a new climate bill, and from President Obama’s continued calls for comprehensive climate legislation.

“We know there’s a lot of work going on behind the scenes in the Senate to bring more people into the tent,” Oko said. Those include more diverse groups — the Pentagon, veterans, business voices and faith-based groups, he said. "What we’re hearing from the American public is they want action and they want leaders in Congress to be productive. The status quo isn’t acceptable.”

USCAP, in announcing the three resignations from its group, praised the companies for their work with the partnership, saying "all three companies have provided invaluable assistance, expertise and significant commitments of time and resources in USCAP’s efforts to advance comprehensive climate and energy legislation." It noted that three new corporate members had joined over the past year, and it expected to add more in the coming months.

"We believe that U.S. action on energy and climate legislation in 2010 will preserve and create American jobs, secure our energy future and generate new investment in the global clean energy economy," the group said.


See also:

Obama: The Making of a Clean Coal President

Obama Calls on Congress to Set Carbon Cap

Study: Carbon Cap Has Little Impact on Small Businesses

Cap and Trade in Perspective: Stopping Acid Rain

Cap and Trade in Perspective: Carbon Trading in the Northeast

Cap and Trade in Perspective: The European Version

Low Carbon Prices: Just a Phase or an Indictment of Cap and Trade?