Analysis: Big Oil tackles climate change

By KRISHNADEV CALAMUR  |  Feb. 13, 2008 at 7:12 PM
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HOUSTON, Feb. 13 (UPI) -- Climate change was on the agenda at an influential oil industry meeting in Houston with repeated calls for a nationwide regime.

"We want to be at the table, want to be an active participant as the U.S. government addresses this issue and comes up with a regime," Red Cavaney, president and chief executive officer of the American Petroleum Institute, the industry's lobby group, told United Press International in an interview on the sidelines of the CERAWeek energy confab. "We have certain views as individual companies within the industry but we concluded that the best thing to do was go to the table without any preconditions."

The theme was one repeated several times by top industry officials who have in the past shied away from government regulation on emissions-related issues.

James Mulva, chairman and CEO of ConocoPhillips, called Tuesday for the industry to play an active role in forming legislation that regulates greenhouse gases, which are believed to cause climate change, or risk "the train … leaving the station." He said without a coordinated U.S. policy, the industry was unlikely to be allowed to invest in major expansions because of concerns over carbon emissions.

"The U.S. needs a strong, consistent and mandatory national framework to manage carbon emissions," he said, "one that is unencumbered by diverging state and regional initiatives. Without this framework, rising public concern over climate change threatens our energy security by contributing to further access restrictions."

Similar calls for energy efficiency and a reduction in carbon emissions were made by Abdallah Jumah, president and CEO of Saudi Aramco, and Nobuo Tanaka, head of the Paris-based International Energy Agency, the energy arm of the Organization for Economic Cooperation and Development.

Linda Cook, executive director for gas and power for Shell, said she's looking for a government policy with "clarity and certainty," especially in programs like carbon taxes or a cap-and-trade system "that may impact the profitability of our investments."

She'd like alignment within the United States and globally, with "similar rules and level playing field around the world."

Cavaney acknowledged that the industry's embrace of the climate-change debate was slow in coming, and said the turning point came when Democrats took control of both houses of Congress and it became clear some sort of climate-change initiative was on the way.

"It's very clear the day for something having being exclusively voluntary -- it had passed," he said. "So the industry recognizes that if we're going to get something that's going to have the broadest possible participation it shouldn't disadvantage voluntary efforts, they should be part of it -- but it recognizes there should be some mandatory portion.

"(There) was the recognition that there was actually going to be a congressional effort under way. In the past, there wasn't sufficient critical mass intellectually, but when the Democrats took control of both houses of Congress and they made a strong commitment to moving this … we wanted to be participant in that."

Cavaney warned, however, that it was important for any legislative effort to tackle emissions to include the world's emerging economies -- especially China and India, two countries whose emissions have been at the center of the argument in the United States against signing on to the Kyoto Protocol, which sets binding emissions-reduction targets on its signatories.

"I don't think you can get something through the U.S. Congress without some conditions -- maybe not binding -- but some commitment … that we try to get the broadest participation possible," he said.

Costs of such participation are unlikely to be low, but within manageable limits. The IEA's Tanaka said at least $50 trillion would be needed to make a 50-percent reduction in emissions by 2050 -- or 1 percent of total gross domestic product from 2005-50. Other challenges include technical shortfalls, public perception and government involvement.

"It would essentially require a third industrial revolution, or an energy revolution, which would completely transform the way we produce and use energy and entail painful adjustment," Tanaka said.


(Ben Lando contributed to this story.)

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