Why refiners got the shaft in Waxman-Markey

A ConocoPhillips employee we talked to at the Energy Citizens rally this week asked a really good question about the climate change bill passed by the House: “Why are the electric utilities being given such a break and the refineries aren’t?”

Why do we pay more for climate change here ….. (Sean Gardner/Chron)

Under the cap-and-trade bill electric companies get a huge chunk of their initial carbon offsets for free in the first five years. There’s also a lot of money in the bill to develop “clean coal” technologies and carbon capture and sequestration projects. The idea was to give those industries time to either transition away from coal-fired power plants or develop better technologies to clean up those plants.
What did refineries get? Just about 2 percent of their credits for free, not even enough to cover their own emissions, nevermind the credits they will need to buy to cover the carbon content in the fuel they refine and we all use. That means the rubber meets the road for carbon costs at the gas pump.

waparish_1 … than we do here? (Gary Fountain/Chron)

So how did refiners get a bigger share of the total burden versus the power industry?
For starters every congressional district has a power utility, but not all of them have refineries. Those facilities are pretty limited geographically, with most of them concentrated in Texas and Louisiana. The rest of the oil and gas industry that cares the most about refining is located mainly in those two states plus Oklahoma, Alaska and maybe some pockets in Colorado and Wyoming. Come voting time in Congress that’s not much of a block to counter the Midwest and Southeastern states where coal is a bigger deal (despite Gene Green’s best efforts).
Making consumers pay for the carbon dioxide at the pump instead of at the electric meter at the back of their homes may also seem more palatable to some in the House. It’s essentially an extension of the fuel taxes that already fund our highways, a tool that some feel (rightly or wrongly) actually helps discourage wasteful driving habits.
So, with the Senate about to take up the bill it’s no surprise the industry is coming back to the table with a sledgehammer. The natural gas arm of the industry is coming back to the table a bit more carefuly by asking for the next bill to include some carve-outs for carbon capture for natural gas plants (which are maybe better suited for the process, notes one industry lobbyist).