Oil Slick

The petro-giants are touting their new sensitivity to global warming. They’re also spending huge amounts of money to defeat anti-warming legislation.

To hear the captains of the oil industry speak these days, you’d think the petro-giants are leading the charge against climate change.

At a recent energy conference in Houston, the CEOs of both Chevron and ExxonMobil pledged to combat global warming. Chevron boss David J. O'Reilly called for national regulation of carbon dioxide fumes, while Exxon honcho Rex Tillerson said, “We know our climate is changing, the average temperature of the earth is rising, and greenhouse gas emissions are increasing.” He later added: “Our industry has a responsibility to contribute to policy discussions on these important issues – and to take concrete actions ourselves to reduce emissions.”

Chevron has rolled out a four-part plan to address global warming, and set up an environmentally focused website that states, “One of the most critical environmental challenges facing the world today is reducing long-term growth in greenhouse gas (GHG) emissions,” and goes on to blame fossil fuels for those emissions.

While the industry is publicly playing up its concern about rising temperatures, major oil business players are doing their best to scuttle laws intended to stop global warming. An analysis of recent lobbying and campaign spending by the Center for Investigative Reporting found during 2005 and 2006 oil companies spent roughly $100 million trying to kill green legislation in California alone.

The oil industry, led by Chevron and ExxonMobil, lobbied vigorously against AB 32, the state’s precedent-setting anti-warming bill, which was signed into law by Governor Arnold Schwarzenegger last winter. Although state disclosure forms don’t pinpoint precisely how much money the firms spent trying to derail the bill – or exactly how they spent the money -- the documents show the petroleum industry and its trade associations devoted more than $11.5 million to lobbying while the bill was under consideration.

Oil firms also poured more than $94 million into defeating Proposition 87, a ballot measure that would’ve taxed petroleum and funneled the money into an array of alternative energy initiatives, funding research into renewable fuel technology, and providing financial incentives for consumers to purchase hybrid autos.

Paul Vercruyssen of Sacramento’s Center for Energy Efficiency and Renewable Technologies, a nonprofit pushing for clean energy legislation, says the industry’s behind-the-scenes actions contradict its new public stance on warming. “The reality in the halls of the legislature and in the state agencies is that they’re not following through on the image they put out,” comments Vercruyssen. The oil firms, he adds, “have to be dragged kicking and screaming to do anything” about climate change.

A landmark of 21st century eco-legislation, AB 32, titled the Global Warming Solutions Act of 2006, is the first American law at either the state or national level to place a firm cap on greenhouse gas pollutants. The law, which limits greenhouse emissions from oil refineries, power plants, and factories, promises to pull emissions back down to 1990 levels by 2020.

Since Governor Schwarzenegger, a Republican, signed the bill, the national media has hailed the former action movie star as an environmental hero, with glossy magazines like Outside and Wired praising him as a visionary.

But if the oil industry had gotten its way, AB 32 would’ve died a quiet death.

Assembly Speaker Fabian Núñez, who co-wrote the bill with then-assembly member Fran Pavley, says Big Oil exerted heavy pressure on legislators, encouraging them to water down or bury AB 32. The industry mounted “fierce opposition,” recalls Núñez, a Democrat. “They had a well thought-out, very intense campaign to kill the bill every step of the way. They concentrated their resources on the legislature. ...They were trying to get at people from as many different angles as possible.”

Núñez’s contention is backed up by lobbying reports on file with the California Secretary of State. Those records don’t show precisely how much each company spent trying to modify or scuttle AB 32, but they do show that the world’s biggest oil companies lobbied on the bill, and that they poured millions of dollars into lobbying efforts during the months lawmakers were debating the merits of AB 32. Big spenders include ExxonMobil ($280,921); Shell ($1,182,717); Chevron ($1,832,467); and an industry trade group, the Western States Petroleum Association ($6,712,215).

Additionally, Chevron funneled hundreds of thousands of dollars to business associations that lobbied against AB 32, giving $100,000 to the California Chamber of Commerce, and $329,000 to a San Francisco-based lobbying group called the California Council for Environmental and Economic Balance (CCEEB).

Letters obtained by CIR detail the industry’s position. In a June 2006 letter to legislators, CCEEB urges politicians to oppose the bill, describing the regulations as “neither reasonable nor cost-effective.” “We believe that if AB 32 is implemented it could set back California’s constructive efforts to address climate change,” continues the letter, which argues for more study of the potential costs of the anti-warming law, and advocates for voluntary – rather than mandatory – reductions in greenhouse fumes.

The Western States Petroleum Association, a lobby supported by oil firms doing business in California and five other states, made an even more dramatic case against the bill. “We estimate a potential loss of 17 percent of fuel production, equivalent to the loss of three average sized California refineries,” wrote an association spokesman in an April 2006 letter sent to legislators in both houses. According to the trade group, “AB 32 could lead to mandated shortages of transportation fuels in California making California more uncompetitive.”

At the Natural Resources Defense Council, a nonprofit environmental group, Devra Wang followed the statehouse wrangling closely. “They were simply telling folks to vote no, saying ‘It’s going to cause us to ration gas. It’s going to bring down the economy. It’s going to force us to flee the state,’” says Wang, director of the organization’s California energy program. “They lobbied pretty hard. They made it a top priority.”

However, she notes, the oil firms “didn’t do a very public campaign. I think that’s because the public wants to see action on global warming.”

Tupper Hull, director of strategic communications for the petroleum association, says the oil companies he represents have a philosophical problem with AB 32, because the law employs a “command and control, top-down, regulatory approach. Business doesn’t care for those methods.”

Despite the industry’s disdain for anti-warming regulation, Hull says the oil business is intent on developing carbon-neutral energy sources. “Someone would have to live in a cave not to be aware of the tremendous focus on this issue and the billions of dollars that the industry is pouring into the development of alternative fuels,” he comments.

One thing that Hull and Wang can agree on is the fact that the major oil firms don’t speak with a single voice. Wang credits London-based oil producer BP, which is in the process of creating a $500 million renewable energy research center with the University of California, with taking a helpful approach to AB 32. “BP was generally engaged in a good-faith effort,” she notes. “From my experience they were the only oil company that engaged in a constructive dialogue.” The company has since joined with Alcoa, DuPont, Caterpillar, Duke Energy, and other corporate heavyweights to champion mandatory curbs on carbon dioxide and other heat-trapping gases.

Chevron spokesman Alex Yelland says the company (which pocketed a record $17.1 billion in profits last year) fears a patchwork of state anti-warming laws will raise costs for the company and consumers. “We do not support a state-by-state approach,” Yelland tells us, adding that Chevron is pushing for a “national framework” for dealing with climate change. Any nationwide rules, argues Yelland, should be “flexible” and allow oil companies to pocket a reasonable profit.

Speaking of profits, Chevron last year dumped a decent chunk of its earnings into defeating Proposition 87, a 2006 California ballot measure that would have levied a per-barrel tax on oil and piped the money into a fund for developing renewable energy sources. Campaign records show Chevron spent a staggering $38 million to defeat the measure, which was bankrolled by Hollywood film producer Steve Bing.

Not surprisingly, they weren’t the only ones spending big money to stop Proposition 87: Aera Energy, a joint venture of ExxonMobil and Shell, pumped $32.8 million into the No on 87 effort, while BP and ConocoPhillips contributed about $3 million each.

The petroleum association’s Hull says Proposition 87 “was bad public policy and the voters rejected it. It made no sense to penalize the production of oil within the state of California.”

In total, oil industry spending tallied more than $94.1 million – providing nearly 100 percent of the funding for the No campaign, which blanketed TV, radio, and print publications with ads in the weeks leading up to the election. On the other side, the pro-87 crowd blew more than $61.2 million. The combined spending frenzy made Proposition 87 the most costly ballot measure skirmish in California history.

“It was just ridiculous,” recalls Vercruyssen of the Center for Energy Efficiency and Renewable Technologies. The oil companies, he says, had a practically “bottomless pit of money and they were going to spend whatever it took” to choke Proposition 87.

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