Energy News | Energy Firms Find No Unity on Climate Bill

fuel_650WASHINGTON — As the Senate prepares to tackle global warming, the nation’s energy producers, once united, are battling one another over policy decisions worth hundreds of billions of dollars in coming decades.

Producers of natural gas are battling their erstwhile allies, the oil companies. Electrical utilities are fighting among themselves over the use of coal versus wind power or other renewable energy. Coal companies are battling natural gas firms over which should be used to produce electricity. And the renewable power industry is elbowing for advantage against all of them.

Some supporters of global warming legislation believe that the division in the once-monolithic oil and gas industry, as well as other splits among energy producers, could improve the prospects for the legislation.

“It’s much harder to pass clean-energy legislation when big oil and other energy interests are united in their opposition,” said Daniel J. Weiss, climate policy director at the liberal Center for American Progress. “The companies that recognize the economic benefits in the bill can help bring along their political supporters.”

The American Petroleum Institute trade group, dominated by major oil companies, opposes the legislation, saying it would discourage domestic exploration and lead to higher oil prices. But some natural gas companies, though longtime members of the institute, have formed a separate lobby and are working actively with the bill’s sponsors to cut a better deal for their product.

The proposal moving through Congress would cap the emissions of greenhouse gases each year and allow companies to buy and sell permits to pollute. That approach, known as cap and trade, is meant to guarantee that emissions will decline, while providing market incentives for companies to invest in low-carbon technologies.

The measure would effectively put a price on carbon, raising the prospect that some energy producers might have to pay more than others. For that reason, billions of dollars could be at stake in some of the most arcane language in the bill.

Energy lobbies are using every tactic in the book to protect their industries, producing alarming studies about $5 gasoline and other steep cost increases that might result from a cap-and-trade system. They are also financing protest groups and advertising campaigns. In one case, a public relations firm working for the coal industry even sent opposition letters to Congress under forged names.

The divisions in the energy sector mirror a split in the broader business community. Several large companies like Apple and the utility Exelon left the United States Chamber of Commerce recently over the group’s opposition to climate change legislation.

But the biggest fights are among energy producers. They have spent more than $200 million in the first half of the year on lobbying efforts in Washington, according to the Center for Responsive Politics, a nonpartisan research group, up from $174 million in the same period last year.

“The fact that the lobbying is so fast and so furious is a positive sign that this thing is moving along,” said Mark Brownstein, a managing director at the Environmental Defense Fund and an advocate of climate legislation. “The fact that everyone is rushing to Washington tells you people believe it is real.”

As legislation inches through Capitol Hill, onetime allies in the utility sector, like Exelon, which operates low-emission nuclear plants, and the Southern Company, a big consumer of coal, find themselves on opposite sides of the debate over renewable energy.

Utilities that have access to hydroelectric power or operate nuclear plants tend to favor a national mandate to increase the use of renewable power, because their carbon emissions are relatively low. Many coal-dependent utilities, particularly in the Southeast and Midwest, oppose the provision because they emit more carbon and would have to buy more permits over time.

In past energy policy debates, the oil and gas lobbies were largely united. In 2005, they won incentives for drilling in the Gulf of Mexico. Two years later, after Democrats had taken control of Congress, producers were unable to block a huge new mandate for alternative fuels like ethanol and biodiesel, but managed to save valuable oil industry tax breaks that some Democrats tried to end.

Today, each energy subsector, fearing any legislation that might give it a disadvantage, is battling for favor. The gas producers, for example, have formed the American Natural Gas Alliance, which is spending heavily on advertising and lobbying to point out that gas emits roughly half the carbon dioxide of coal. The group has also helped organize its allies in Congress into a new natural gas caucus, with two dozen members.

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