Big Oil’s USCAP exit over emissions

Environmental groups in the U.S. Climate Action Partnership are confirming that a split over how to divvy up valuable pollution permits under climate legislation is a big reason why oil giants BP and ConocoPhillips are walking away from the industry-green partnership.

Oil refiners have long claimed that the big House–approved climate bill and a major Senate proposal would provide them far too few free emissions allowances, especially compared to the bounty for electric utilities and other industries.

The two oil companies that announced their exit this week had pressed USCAP – which has been an influential voice on Capitol Hill – to get behind a system friendlier to refiners, but apparently to no avail.

The New York Times has gathered reactions from the green groups in USCAP, which also includes large utilities, automakers, and chemical companies. Here’s a blurb from their story, which includes comment from Daniel Lashof of the Natural Resources Defense Council and Tony Kreindler of the Environmental Defense Fund.

Mr. Kreindler noted that within the blue chip lobbying alliance — which includes utilities, other oil companies, and consumer products firms — there has long been a “robust debate” about the allocation of allowances.

BP and ConocoPhillips are essentially saying, “‘we want more allowances,’” Mr. Kreindler said.

Their departures, Mr. Lashof argued, may serve to make Climate Action Partnership more focused, because the group will no longer face internal divisions over the hotly contested question of the mechanics of allowance allocation.

The oil companies themselves had indicated that the allocation issue was a factor in their decisions.

“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 Tuesday in announcing his company is abandoning the group.

Shell Oil remains a member of USCAP, which formed in early 2007 to promote cap-and-trade legislation.