Oh, and a system to redistribute consumers' wealth to Wall Street. Cool.
Two from Bloomberg:
The climate-change bill that passed the U.S. House on June 26 would set up a “cap-and-trade” market for greenhouse gases that cushions the cost for power producers, manufacturers and farmers while limiting aid to oil companies.
The bill, which creates a market for carbon dioxide permits potentially worth more than $100 billion a year by 2020, regulates the way the allowances could be traded to guard against speculation with derivatives that lawmakers say might drive up the prices of electricity and gasoline.
The legislation, passed 219 to 212, largely rejected President Barack Obama’s plan to raise revenue for the federal government by selling the permits at auction and instead doled out free credits to win the support of Democrats from coal, manufacturing and farm states. Oil companies got many fewer free permits. The proposal now faces action in the Senate.
“This bill tries to help utilities and manufacturers move to a low-carbon economy without harming consumers, draw farmers into the carbon market and keep that market transparent to prevent improper profit-taking,” Tim Profeta, director of the Durham, North Carolina-based Nicholas Institute of Environmental Policy Solutions at Duke University, said in a telephone interview. “The oil industry got fewer free permits because lawmakers believe these firms can pass the relatively low cost to their consumers without affecting their bottom line.”......The power sector received 35.5 percent of the allowances, a move “designed to give utilities about 85 percent of the allowances they require” until the program phases out most free credits between 2025 and 2030, said Hugh Wynne, a New York-based senior research analyst at Sanford C. Bernstein & Co....
...Oil refiners would receive just 2.25 percent of the allowances for free, while having to acquire nearly 40 percent of the available permits each year to cover the emissions at refineries and the carbon dioxide produced when fuels like gasoline are burned by cars and trucks, according to data from the Environmental Protection Agency...MORE
America’s biggest oil companies will probably cope with U.S. carbon legislation by closing fuel plants, cutting capital spending and increasing imports.
Under the Waxman-Markey climate bill that may be voted on today by the U.S. House, refiners would have to buy allowances for carbon dioxide spewed from their plants and from vehicles when motorists burn their fuel. Imports would need permits only for the latter, which ConocoPhillips Chief Executive Officer Jim Mulva said would create a competitive imbalance.
“It will lead to the opportunity for foreign sources to bring in transportation fuels at a lower cost, which will have an adverse impact to our industry, potential shutdown of refineries and investment and, ultimately, employment,” Mulva said in a June 16 interview in Detroit. Houston-based ConocoPhillips has the second-largest U.S. refining capacity.
The same amount of gasoline that would have $1 in carbon costs imposed if it were domestic would have 10 cents less added if it were imported, according to energy consulting firm Wood Mackenzie in Houston. Contrary to President Barack Obama’s goal of reducing dependence on overseas energy suppliers, the bill would incent U.S. refiners to import more fuel, said Clayton Mahaffey, an analyst at RedChip Cos. in Maitland, Florida.
“They’ll be searching the globe for refined products that don’t carry the same level of carbon costs,” said Mahaffey, a former Exxon Corp. refinery manager.
Prices Seen Rising
The equivalent of one in six U.S. refineries probably would close by 2020 as the cost of carbon allowances erases profits, according to the American Petroleum Institute, a Washington trade group known as API. Carbon permits would add 77 cents a gallon to the price of gasoline, said Russell Jones, the API’s senior economic adviser....MORE