Economic pain will shape how the US addresses climate change—if not the question whether it responds at all.
Advocates of both approaches spoke at the opening session of the National Petrochemical & Refiners Association annual meeting in San Antonio.
John Hofmeister, founder and chief executive of Citizens for Affordable Energy and former president of Shell Oil Co., supported a cap-and-trade system for regulating emissions of greenhouse gases but called schemes under discussion in the US “unworkable.”
Christopher Horner, senior fellow of the Competitive Enterprise Institute, appeared with Hofmeister in a panel session and urged oil companies to resist the cap-and-trade approach as well as a carbon tax.
Earlier, NPRA Pres. Charles Drevna decried US political pressure for a “wholesale transition” in energy use in service to what he called the unfeasible goal of energy independence.
Climate politics
Hofmeister said lowering greenhouse gas emissions with a regulatory cap with provision for trading of emission allowances should be part of a broader global assault on gaseous wastes of all kinds.
But a cap-and-trade system should start with emission credits and introduce a cap only after methods for lowering emissions have matured, he said.
A system that starts with an auction of credits, such as those with most support in Congress and the administration, will collapse. “The economy can’t afford it,” Hofmeister said.
Asserting that he doesn’t subscribe to any particular global warming theory, the former Shell Oil chief said action of some sort is inevitable. In Europe and on university campuses in the US, he said, “It is a given that carbon is dangerous…. There’s such a consensus out there that we’re going to have to deal with it in some way.”
Hofmeister said he fears an economically damaging response to climate change would derail global efforts to manage all gaseous waste as many countries have successfully controlled solid and liquid wastes.
And he criticized the polarized politics of climate change, which he called “the most dysfunctional discussion I’ve experienced in my career.”
Horner urged industry to resist cap-and-trade as well as carbon taxation as responses to climate change.
He noted satellite temperature data that indicate global cooling over the past decade and data histories showing that indicated increases in temperatures that preceded increases in concentrations of carbon dioxide in the atmosphere.
Observations like those discredit the computer models that underlie political calls for urgent cuts in CO2 emissions—costly actions that Horner said can’t affect temperature.
He said the politics of climate change fits a political pattern in which “we have demonized everything, including the things that bring us wealth, health, and survival.”
And he opposed the view that action on climate change is inevitable.
“As the cooling continues, it’s going to be harder to pass the largest tax in American history,” Horner said, referring to the climate program in the federal budget proposed by President Barack Obama.
Political climate
In observations about the US political climate in general, Drevna said Congress and the Obama administration should “look beyond short-term political comfort to long-term economic health.”
He said the priority should be energy security rather than energy independence and argued that security comes from a variety of energy sources, including oil and gas.
“The demise of the hydrocarbon molecule has been greatly exaggerated,” Drevna said.
Asked at a press conference about NPRA’s opposition to a cap higher than the current 10% on ethanol blended in most gasoline, Drevna said that if the ethanol industry, which wants the change, assumes liability for effects on vehicle engines, “then we’ll back off.”
He called the legislative mandate for renewable vehicle fuels of 36 billion gal/year by 2022 “unfeasible,” whether or not gasoline consumption resumes growth.
With a growing mandate already straining the fuel market’s ability to absorb ethanol while requiring new amounts of ethanol from sources other than grain, refiners face the need to “chase credits for something that doesn’t exist,” Drevna said. “They might as well write checks to the Treasury.”
But he said lawmakers, including some from farm states, are beginning to question the ethanol mandate.
“Just because the ethanol industry wants something doesn’t mean they can get it all the time,” he said.
