A climate change bill that could reach the US Senate floor in June is already generating its own heat. Critics of S. 2191, which Sens. Joseph I. Lieberman (I-Conn.) and John W. Warner (R-Va.) introduced last year, warn that its provisions could lead to serious problems because it was pushed quickly through the Environment and Public Works Committee.
“It was not written until late October and was then rushed through the legislative process, when the oil and gas industry was included. The majority did not provide a summary of changes. Each time a new hearing was held, you had to read all 300 pages of the bill to find out what words had been changed,” one insider told me.
Industry groups have been concerned about impacts of the bill’s carbon cap-and-trade program. Some are worried that a provision involving natural gas carbon collection points could reduce domestic production.
“This has eclipsed all our other issues. If Congress makes the wrong choice for climate change and natural gas, the impacts could be devastating not only for our sector but for the general economy,” said William F. Whitsitt, president of the American Exploration & Production Council.
Moved upstream
Paul Wilkinson, American Gas Association vice-president for policy analysis, explained that the collection point originally was at industrial plants or electricity generators. Sen. Frank R. Lautenberg (D-NJ) proposed moving it upstream. Putting it at the wellhead was considered too complicated so lawmakers placed it at the gas processing level.
Producers would need to spend billions of dollars already to buy carbon allowances, Whitsitt said. The amount could jump if processors build additional cap-and-trade costs into their rates, which would bite into producers’ budgets, he told me.
Since most of its members are utilities, AGA’s main concern is that the provision will increase costs for commercial and residential customers who already have made major progress in using gas more efficiently, Wilkinson said.
AGA proposal
AGA has proposed moving carbon-allowance collections back to their original point and not involving residential and commercial customers before 2020. At that time, the Environmental Protection Agency would analyze availability of other technologies and further efficiency gains by residential and commercial customers. “This also would solve upstream entities’ problems with the point of regulation,” Wilkinson noted.
“Increasingly, the senators and staff people we explain this problem to say this wasn’t their intent,” said Whitsitt. “So the question is whether they have the political will to do a 90º, if not 180º, turn now that this bill is so far down the road.” It’s critical that they do so, maintained Paul N. Cicio, president of the Industrial Energy Consumers of America. “The costs are incredibly high in this bill, and it could move more manufacturing out of the US. Natural gas is the low-carbon fossil fuel alternative. We should be encouraging, not discouraging, its production,” he said.
