ConocoPhillips, BP and Caterpillar quit USCAP
Wednesday, February 17, 2010
ConocoPhillips, BP and Caterpillar have dropped out of the U.S. Climate Action Partnership (USCAP), the coalition of corporations and environmental groups that has been most prominent in pushing Congress to pass cap-and-trade legislation.
The loss of three major companies has dealt a blow to the now 28-member group and further dims prospects for the cap-and-trade bill that passed the House last summer and is awaiting action in the Senate.
ConocoPhillips and BP said that USCAP has served its purpose and that they prefer to pursue their interests independently. Conoco and BP pulled out Monday, Caterpillar last week.
Conoco and BP cited concerns about the effect that proposed climate legislation might have on the oil refining business. Conoco chief executive James J. Mulva said in a statement that the current bill "left domestic refineries unfairly penalized versus international competition."
The oil giants also want to do more to promote natural gas, which has become more abundant because of recent developments in the exploitation of shale gas and emits half as much greenhouse gas as coal does. The legislation adopted by the House included benefits for coal producers and coal-fired power plants in an effort to secure the votes of key lawmakers. Many natural gas producers think that more should be done for them.
USCAP said it has added three corporate members in the past seven months, most recently Honeywell in October. AES and Alstom joined last July. "Our mission is unchanged," USCAP spokesman Tad Segal said.
But BP spokesman Ronnie Chappell said, "We think the organization has accomplished what it was intended to do. It has established a broad, principle-based framework for climate-change legislation. With the completion of that blueprint, that work was done."
"We don't think legislation pending in the House or Senate conforms with the blueprint," he added. "A disproportionate share of the cost burden falls on the transportation sector and consumers. As a result, we're going to miss out on the most cost-effective measures, and misallocation of resources could occur."
Chappell said BP was concerned that "poorly designed legislation could result in the closure of refineries, an increase of [refined petroleum] product imports and the loss of U.S. jobs."
Kate Kenny, a Caterpillar spokeswoman, said the company wants to focus on carbon capture and storage projects, such as FutureGen, an Illinois plant that is partly financed by the federal government.
"We have decided to direct our resources toward the commercialization of technologies that will promote and provide sustainable development and reduce carbon emissions," she said in an e-mail.
Corporate membership in USCAP costs about $100,000, according to an oil company official.
Conoco Phillips joined at the urging of one of its directors, William K. Reilly, who was head of the White House Council on Environmental Quality under President George H.W. Bush, according to sources who spoke on the condition of anonymity to protect their relationships with Conoco. They said Mulva had become convinced that human activity was contributing to climate change and that national legislation would be better than myriad state regulations.
But industry lobbyists said the cost to U.S. refineries, which lost money for much of last year, now seems to be too great.
Shell Oil said it is staying in USCAP, despite the exit of fellow oil giants. "Shell has long supported a market-based approach to addressing energy supply and CO2 emissions," the company said in a statement. "We are pleased to continue our association with USCAP."