Juice: It’s a Happy New Year for Big Oil

2 Jan 2018

California environmental regulators are trumpeting their updated master plan for reducing greenhouse gases as “a template for other jurisdictions who are also committed to preventing the worst impacts of a warming planet.”

Yet, the California Air Resources Board’s latest “scoping plan” gives big oil a free pass. The rest—the electricity, natural gas, and other businesses sectors, as well as consumers—must pay the piper.

The latest update of the plan, adopted by the Air Board late last year, outlines increasingly aggressive steps to decarbonize the power industry and promote electric vehicles in every nook and cranny of state. But when it comes to oil refineries and wells, it dwells in the realm of euphemism, lumping big oil into a general “industrial” source category along with production of cement, processed foods, paper, and medicine.

The oil industry and the vehicles the industry fuels are by far the largest source of greenhouse gas emissions in California.

However, the Air Board’s plan explains that the state’s goal is to keep industries here so they can be tightly regulated while maintaining “the availability of associated jobs.” It also states it seeks to protect the “local tax base that supports local services such as public transportation, emergency response, and social services, as well as funding sources critical to protecting the natural environment and keeping it available for current and future generations.”

This head-spinning logic reasons that we can all drive electric cars, but oil production and refining will remain essential to environmental protection and economic prosperity.

Not only do state regulators signal a hands-off approach to regulating major refineries, they also plan to continue coddling the oil industry by giving oil companies free emissions rights under California’s carbon cap-and-trade program, the hood ornament for the state’s leadership on climate change.

This year, for instance, the state’s oil refineries bagged more than 19 million tons of free emissions allocations, which should cover more than 86 percent of the greenhouse gases they will spew into the atmosphere based on the Air Board’s latest greenhouse gas emissions inventory. The remaining emissions can be covered by allotments purchased in auctions or by buying widely available offsets. The associated costs are simply passed on to motorists.

Meanwhile, state regulators passed out more than an additional 9 million tons of free emissions allowances to oil producers. These are the friendly folks who operate oil wells that emit cancer-causing and malodorous gases next to people’s backyards throughout the Los Angeles area.

Throwing a bone to environmental justice advocates who represent “fence line communities” contiguous to the state’s refineries, the latest scoping plan outlines a vague promise that the Air Board will work with local air quality districts to require retrofits at refineries with the best available controls to reduce, but not eliminate, emissions of toxic and smog-forming pollutants.

On its face that may sound reasonable, but it’s hard to imagine that oil refineries and wells will continue to operate full tilt boogie under a plan that ostensibly promises to keep the state “on track for a low- to zero-carbon economy by involving every part of the state.”

California’s squeeze on the auto industry to produce more electric cars and its plan to spend cap-and-trade money and energy utility ratepayer money to subsidize consumers to buy them may undercut the local market for the gasoline that refiners pump out 24/7/365. But it’s now clear that state officials intend to let the plants continue to operate and export their fuel to other states and nations.

When it’s burned—although outside of California—it will continue to release some 160 million tons a year of greenhouse gases into the atmosphere, substantially undercutting the state’s carbon reduction program. A small cabal of oil industry executives, and to a far lesser extent unionized workers, will get the booty. Meanwhile, the rest of us have to pay the cost of adapting to a hotter climate and sea level rise.

Unless state policy makers come to grips with the fact that there’s little room for oil refining and drilling in a “zero-carbon economy,” the oil industry will continue to laugh all the way to the bank, making a mockery of the state’s climate protection program and continuing to expose those who live around oil facilities to harmful pollutants.

—William J. Kelly

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