Energy companies fight own emissions corner

After making common cause for years, the energy companies campaigning for legislation to curb US greenhouse gas emissions are finding that what divides them may be as important as what unites them.

On Tuesday, BP and ConocoPhillips, the oil and gas groups, withdrew from the US Climate Action Partnership, which campaigns for climate legislation.

They say they need to make their case for themselves as the debate moves from whether an emissions cap is needed, to how it would be implemented.

As the details come into focus, oil and gas companies are being split off from the power generators such as Duke Energy, Exelon and NRG Energy, which remain members of the USCAP. The oil and gas companies say they still want an energy and environment bill to be passed, but do not want just any bill. In particular, they are concentrating on lobbying for legislation promoting natural gas as a way to reduce carbon emissions.

Oil companies argue that many of the bills that have come before Congress place an unfair burden on motor fuels and offer too many concessions to coal.

The Waxman-Markey bill that passed in the House of Representatives last year, for example, allocates 2 per cent of allowances to fuel producers but makes them responsible for 44 per cent of emissions.

Wood Mackenzie, the consultancy, said last year the proposed legislation could threaten the sustainability of the US refining industry, costing US refiners $100bn (€73bn, £64bn) a year within three years. That would hit an industry under pressure from a drop in demand.

On top of that, the industry is upset President Barack Obama’s new budget outlines about $80bn in tax increases on the US oil and gas industry.

Jim Mulva, chief executive of Conoco, explained the bills in Congress seek unnecessarily punitive measures on the industry while ignoring the “critical role” natural gas could play in reducing carbon emissions. Natural gas is about 50 per cent less carbon intensive than coal.

Larry Nichols, chief executive of Devon Energy and chairman of the American Petroleum Institute, the industry’s national trade organisation, said: “We do not understand how the Obama administration and Congress can advocate subsidies for nuclear energy, wind and solar while calling for new taxes on natural gas.” Mr Nichols said he was not surprised BP and Conoco left USCAP.

Royal Dutch Shell, the last remaining big oil company in the USCAP, shares Conoco Phillips’ concerns but the company will stay in USCAP to “remain engaged”.