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Shell, ConocoPhillips May Get Free Carbon Permits in California
2010-10-28 14:51:44.160 GMT
By Simon Lomax
Oct. 28 (Bloomberg) -- Oil refiners including Royal Dutch
Shell Plc and ConocoPhillips would be among the companies to get
free pollution rights under California's planned cap-and-trade
program for carbon dioxide and other greenhouse gases.
The proposed rules for the cap-and-trade program, in which
electricity companies, factories and refineries would buy and
sell carbon dioxide permits, are to be unveiled tomorrow by the
California Air Resources Board. Most of the permits will be
given away when the program starts in 2012, said Stanley Young,
a spokesman for the agency.
"We have designed the program to definitely begin with a
soft start," Young said in a telephone interview.
The carbon trading proposal is authorized under
California's Global Warming Solutions Act, which requires the
state to cut its greenhouse gases to 1990 levels by 2020. The
agency's 11-member board will meet Dec. 16 to vote on the plan,
Young said.
The plan will be unveiled four days before California
voters decide the fate of the global-warming law. Proposition 23
on the Nov. 2 ballot would suspend it until California's
unemployment rate falls from its current level of 12.4 percent
to 5.5 percent for at least a year.
The political fight over Proposition 23 has spurred more
than $40 million in campaign contributions, with supporters and
opponents of the initiative trying to sway voters with radio,
print and television advertising.
Fundraising Differences
Defenders of the act, who include Microsoft Corp. founder
Bill Gates, Google Inc. co-founder Sergey Brin and San Francisco
hedge-fund manager Tom Steyer, have raised almost three times
more money than Proposition 23 supporters such as San Antonio-
based refiners Tesoro Corp. and Valero Energy Corp.
A poll released Oct. 25 by the University of Southern
California and the Los Angeles Times showed Proposition 23
trailing among likely voters 32 percent to 48 percent.
The California air quality agency's plan for giving away
carbon dioxide permits rejects the advice of an expert panel,
which favored selling most, if not all, the pollution rights.
Environmental groups had also urged the air resources board to
sell all the permits at auction.
Republican Governor Arnold Schwarzenegger, joined by oil
refiners such as BP Plc and Chevron Corp., lobbied the agency to
auction only a "very small" number of permits at the start of
the cap-and-trade program. Forcing companies to buy all their
carbon permits at auction would impose "unnecessary short-term
costs," Schwarzenegger said in a March 24 letter to the board.
Recession Compromise
The agency's decision to give away carbon dioxide permits,
also called allowances, at the start of the program is a
"compromise to the recession," said Stephen Levy, director of
the Center for the Continuing Study of the California Economy in
Palo Alto and a member of the panel that recommended carbon
permit auctions.
Given the debate on Proposition 23, free permits the right
move "to get the system started on time," Levy said. Still,
the allowances should be phased out before 2020 so more can be
sold, he said.
Shell, ConocoPhillips, BP, Chevron, Tesoro and Valero all
have refineries in California.
Getting Started
Chris Busch, policy director at the Center for Resource
Solutions, a San Francisco environmental advocacy group, said
that while it's disappointing that the refineries and other
companies will get free carbon allowances, it may be necessary
"at this difficult economic time."
"I would take an imperfect program over nothing," Busch
said. After the first few years of the cap-and-trade program,
"it will be easy to ramp up" the number of carbon dioxide
permits sold at auction, he said.
Young, the spokesman for the California air quality agency,
declined to comment on the specifics of the cap-and-trade
proposal before its release tomorrow.
For Related News and Information:
Top environment stories: GREEN <GO>
Stories about U.S. and climate: TNI US CLIMATE <GO>
Global emissions data: EMIS <GO>
Northeast U.S. trading: RGGI <GO>
--Editors: Charlotte Porter, Richard Stubbe
To contact the reporter on this story:
Simon Lomax in Washington at +1-202-654-4305 or
slomax@bloomberg.net.
To contact the editor responsible for this story:
Dan Stets at +1-212-617-4403 or dstets@bloomberg.net.
