New Foes Emerge in Carbon Bill Fight: Oil Refiners

by Kelsey Brugger and Emma Dumain (E&E Daily) Three prominent oil refiners have been raising concerns with Republicans over legislation that would study the carbon intensity of domestic products.

Some of the nation’s largest oil companies have been raising concerns with congressional Republicans over bipartisan legislation that would study the carbon intensity of nearly two dozen industrial products, including crude oil.

The bill, a modest effort on climate action that would simply require a study, has been maligned by some on the right as a precursor to a carbon tariff and a potential backdoor to a domestic carbon tax.

A version of the bill has already passed the Senate Environment and Public Works Committee. Now, in the leadup to the anticipated introduction of a companion measure in the House, industry is weighing in with criticism.

Five people close to the negotiations around the bill — the “Providing Reliable, Objective, Verifiable Emissions Intensity and Transparency (PROVE IT) Act” — said House Republicans have been contacted in recent weeks by representatives from Valero, Marathon Petroleum and Koch Industries. All were granted anonymity to speak candidly.

Two people involved in discussions said that Valero and Marathon, which operate oil refineries, are nervous that the foreign oil and petroleum processed through their refineries could receive high carbon-intensity scores in the study.

A refining sector executive confirmed the industry has raised concerns on the Hill about “unintended consequences” of tariffs for import and export industries — but denied lobbying against the bill on behalf of any one company.

“We want to make sure those issues are understood and they are at least in the mix as the legislation moves forward,” the executive said.

Koch Industries, which runs several refineries as part of its business portfolio, is listed as lobbying on the “PROVE IT Act” in disclosure forms.

Industry opposition to the proposal, first introduced in the Senate as S. 1863, from Sens. Chris Coons (D-Del.) and Kevin Cramer (R-N.D.), was not previously public.

The pushback against the bill by refiners shows that anxiety about the effort runs deeper than just the gripes from ideological conservatives.

The internal fight over the legislation also comes at a tenuous political moment for Rep. John Curtis (R-Utah), who plans to be the lead sponsor of the measure in the House. He is seeking the Republican nomination for an open Senate seat and the primary is next Tuesday.

Rep. Mariannette Miller-Meeks (R-Iowa), who recently took over for Curtis as chair of the Conservative Climate Caucus, does not plan to support the legislation.

A House Republican aide confirmed a number of Republican offices were contacted by Valero, Marathon Petroleum and Koch Industries in the days following a report by POLITICO’s E&E News that published the names of potential House GOP lawmakers likely to sign on as co-sponsors of the pending House bill.

Those names were obtained through a leaked internal memo from the American Petroleum Institute, which supports the bill. A Miller-Meeks aide later said she would not be an original co-sponsor “if and when” Curtis introduces the bill.

The “PROVE IT Act” would mandate a Department of Energy study of dozens of industrial imports. The idea behind the bill is that it would show the materials produced in the United States have a far lower carbon footprint, underscoring the “U.S. carbon advantage” in trade relationships.

There’s an urgency for the U.S. to come up with its own carbon intensity measurements, supporters say, as the European Union is in the process of implementing a tariff system based on such measurements and the United Kingdom could soon follow.

API, which has been seeking to burnish the green image of its members in the oil and gas industry, supports the bill because it would “demonstrate our industry’s commitment to producing cleaner, safer, and more affordable energy here at home while still supplying the energy our world needs.”

And proponents are quick to stress that this is only a study, and nothing in the bill would necessarily lead to a carbon tariff or tax. It’s also highly unlikely the “PROVE IT Act” will become law any time soon, in an election year with a divided House and Senate.

But it hasn’t stopped oil companies with major refinery operations, like Valero and Marathon, from fretting over how their businesses would be affected on the off chance the effort takes off.

Sen. Bill Cassidy (R-La.), a backer of the bill, said, “This basically looks like it’s going to be Trump policy. Trump just said something about how he’d like to reduce taxes and make up for it with tariffs. It’s good economic policy.” READ MORE

Excerpt from E&E Daily: Amid fierce opposition from conservative activists and some oil and gas interests, a bipartisan contingent of House members is set to introduce legislation that could one day pave the way for carbon import tariffs. It’s a major victory for a group of lawmakers and their allies who have been working toward this moment for more than a year.

Reps. John Curtis (R-Utah) and Scott Peters (D-Calif.) are unveiling their version of the “Providing Reliable, Objective, Verifiable Emissions Intensity and Transparency (PROVE IT) Act” on Tuesday, leading a total of 20 co-sponsors equally divided between their two parties.

Like the Senate bill of the same name, S. 1863, from Sens. Chris Coons (D-Del.) and Kevin Cramer (R-N.D.), the House companion would simply call for a Department of Energy study of the carbon intensity of nearly two dozen domestic industrial imports.

The information gathered from that study is widely expected to show that materials made in the United States have a lower emissions threshold than they do when produced by foreign countries, underscoring the “U.S. carbon advantage” in trade relationships.

“I like to remind people, ‘It’s just a study, right?’” Curtis said Monday. “Why would we be afraid of data?”

But that data could be used in the future to justify a new trade policy tied to climate action, particularly as the European Union is forging ahead with its own carbon border tariffs. READ MORE