Refiner Opposes Climate Legislation

After a couple of weeks during which companies in favor of climate change legislation have been making an increasing amount of noise, a Texas oil refiner is weighing in against it with a web site.

Valero Energy of San Antonio, Texas, launched the web site because it fears the legislation could ruin its refining business. Legislation passed by the U.S. House of Representatives would force companies to either reduce their emissions of carbon dioxide and other greenhouse gasses, or buy credits allowing them to emit carbon dioxide. Similar legislation was introduced in the Senate by Sens. Barbara Boxer and John Kerry last week, but serious debate isn’t expected before the Senate settles the health care issue.

Jim Greenwood, vice president of government affairs, tells the San Antonio Business Journal that the cap-and-trade scheme envisioned in the current legislation would be disastrous for his company. Valero would have to buy credits for the 327 million metric tons of CO2 his company emits. The current price of such credits on the European market would be between $6 billion and $7 billion.

“The best year we ever had was in 2005, when we had $5 billion in profits on $110 billion of revenue,” he says. “Granted that we bring in a lot of revenue on gas sales, but our margins are razor thin.”

Valero isn’t opposed to any legislation, Greenwood says. He says his company would prefer a carbon tax that would encourage everybody to reduce emissions.

Valero’s web site is one more sign that the fight over global warming is heating up within the business community, with some of the biggest companies and lobbying groups in the country lining up on one side or the other of the issue.

Last week, John Rowe, CEO of Exelon Corporation, one of the nation’s largest electric utilities, became the latest in a string of CEOs to say his company would quit the U.S. Chamber of Commerce—one of the biggest business lobbying groups with, over 3 million members—over positions the Chamber has taken toward climate change. The Chamber has said it doesn’t oppose the principle of tackling global warming, but is concerned about the cost of such a change.

Rowe’s Chicago-based company is the nation’s largest provider of nuclear power, and a large portion of its electricity also comes from natural-gas plants. Natural gas is the cleanest burning of the fossil fuels, and nuclear power doesn’t emit any greenhouse gasses. So it’s not as much of a stretch as it may seem for Exelon to support a lower-carbon society. It could conceivably be a winner in such a society—able to trade emissions permits for a profit with heavier greenhouse-gas emitters.

But Exelon wasn’t the first of the big utilities to depart the Chamber.

PG&E Corp. CEO Peter Darbee last month launched a letter to Chamber CEO Thomas Donahue criticizing the Chamber’s recent positions on climate change and announcing that his company was leaving the organization. “Extreme rhetoric and obstructionist tactics seem increasingly to mark the Chamber’s public stance on this issue,” Darbee wrote. “PG&E considers climate change to be among the most serious issues ever for our company, our country, and the world. With this in mind, after careful consideration, we have come to the difficult conclusion that our differences over this issue have grown so significant that we will not renew PG&E’s Chamber membership next year.”

Nike stopped short of quitting the Chamber but it has resigned its seat on the Chamber's board.

Some 25 large companies—including DuPont, BP America, Ford Motor Company, and General Motors—have joined the United States Climate Action Partnership, a group focused on supporting cap-and-trade legislation.