Posts Tagged ‘carbon legislation’

The American Clean Energy and Security Act was recently passed by the House of Representatives Committee on Energy & Commerce. The legislation, introduced by Congressmen Henry Waxman and Ed Markey, proposes to tackle climate changes by reducing greenhouse gas emissions. Oil companies, when they refine oil in the U.S., would have to buy allowances for carbon dioxide spewed from their plants and from vehicles when motorists use their fuel. Instead of refining oil in the U.S. if oil companies import oil, they would need to buy permits only for emissions from motor vehicles and not for emission from their plants. Oil companies say this would favor oil imports rather than production in the U.S.

ConocoPhillips Chief Executive Officer Jim Mulva said: “It will lead to the opportunity for foreign sources to bring in transportation fuels at a lower cost, which will have an adverse impact to our industry, potential shutdown of refineries and investment and, ultimately, employment.” Roger Ihne, a consultant at Deloitte Consulting, believes that about 2 million barrels of daily U.S. refining capacity will shut down because carbon costs will be several times the operating profits for some plants. Some analysts believe that the saber rattling by the oil companies is with an aim to get concessions from the government to offset increased costs on account of compliance with carbon legislation. John Coequyt, a lobbyist with the Sierra Club, an environmental organization, said: “The strategic value of this is pretty obvious. They want to qualify for rebates under the competitiveness test, which of course they do not.”