Oil sector ‘encouraged’ by climate deal

A last-ditch effort to expand support for climate legislation runs the risk of undermining the coalition that has pushed the bill as far as it has gotten, energy lobbyists said Monday.

There appears to be little appetite in the Senate for a House-passed bill that would set up an economy-wide “cap-and-trade approach.” But it isn’t clear that a new approach will significantly change the political dynamics, and it could weaken support among electric utilities and some environmental groups for the bill.

{mosads}Lobbyists said additional support among businesses for a climate bill is critical given the weakness of the economy and likelihood business lobbies would attack a carbon cap as a job killer.

One critic said he welcomed a new approach. Jack Gerard, president and CEO of the American Petroleum Institute, said he was “encouraged” by reports that Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) were considering ways to ease concerns among oil companies about the House climate bill.

Their bill would “moderate some of the excesses” of the House bill, Gerard said. 

“Clearly, they are going in a much better place.”

As first reported by The Washington Post, Kerry, Graham and Lieberman are expected to ditch a so-called “economy-wide” cap-and-trade bill in favor of taking different approaches to three sectors primarily responsible for carbon dioxide emissions: utilities, transportation and industry.

Oil refiners, for example, would be removed from a cap-and-trade system that requires participants to hold allowances to cover their emissions. Instead, a “linked carbon fee” would be applied to gas prices. The fee would be based on the trading price for carbon in an emission allowance market that utilities would still participate in.

Gerard called the approach more transparent because it would allow consumers to more clearly see the costs of carbon.

Refiners have complained for months that the system set up by the House bill was unfair. They would have to cover the emissions from their plants and from the use of their products, but wouldn’t get the number of allowances to cover those emissions. They would have to buy additional allowances in the market.

Gerard said the approach being developed by Kerry, Lieberman and Graham would cost oil companies less than the House bill.

A different approach may gain some support among refiners but cost some support from utilities.

The Edison Electric Institute, the main trade group for the utility sector, helped develop the allowance formula the House bill uses.

One lobbyist for a utility that has backed climate legislation said utilities favor a broad cap-and-trade system because a wider market will help lower the costs to comply with the new emissions targets.

He said it was unlikely the new approach would break the impasse in the Senate on climate.

“I have a hard time seeing how they get to 60 votes — or close to 60 votes, for that matter,” said one lobbyist for an electric utility that is supporting climate legislation.

Gerard may be encouraged by the new approach, but he isn’t ready to lobby for the bill. 

“We’ve still got a long ways to go,” he said.

Increasing the price of gasoline would be “very difficult in the current political environment because of the focus on jobs and the economy,” Gerard said.

API raids environmental group for grassroots director

This is an interesting job change: API has hired the Nature Conservancy’s climate change organizer as its new grassroots director.

Deryck Spooner is now API’s senior director for external mobilization following his stint managing the Nature Conservancy’s climate change advocacy and outreach work, API announced Monday.

API said Spooner will coordinate efforts to “develop, mobilize and sustain a political infrastructure of individuals, groups and coalitions to advance priority advocacy issues with elected officials.” The move comes amid API efforts to rally members of the public against energy and climate change plans it believes would hamper domestic energy production and raise prices.

API last year was the driving force behind the launch of the “Energy Citizens” campaign that organized rallies and other actions to fuel opposition to cap-and-trade legislation.

API President Jack Gerard on Monday lauded Spooner’s “extensive experience” in political and issue campaigns. “He’s a veteran of coalition building and grassroots mobilization and will play a vital role in our advocacy work at a critically important moment for U.S. energy policy. We’re extremely fortunate to have him on our team,” Gerard said in a prepared statement.

Spooner said the new role involves an industry he came to know as a child.

“My father was a petroleum engineer in the oil business. I spent part of my childhood on the rigs. I know how important oil and natural gas are today and will be for the nation’s energy future even as the use of alternative energy grows. I’m determined to work hard to help ensure the nation’s energy policies reflect this reality,” he said in a statement.

Spooner worked for the Nature Conservancy for a total of five years in two stints dating back to 1999, an API spokesman said Monday.

Spooner hails from Trinidad and Tobago and lives in Washington with his wife and their three children. He is close to completing a Ph.D. in political science at Howard University, API said in announcing his hiring Monday.