Although climate change legislation is moving fast, it still must be done right

President Obama and his Congressional leadership allies are trying to swiftly enact national cap & trade legislation.  The House has narrowly passed HR 2454 in late June, a bill that would require U.S. carbon emissions to be cut by more than 80% by 2050 from their 2005 levels.

To facilitate the transition to a carbon-constrained economy, the House would set an upper limit on the amount of man-made carbon that can be released into the atmosphere (the ‘cap’) and creates tradable ‘emissions allowances’ (the ‘trade’).  Initially, most of these allowances will be given away for free by the federal government.  After this initial time, these same allowances will transition from being free to being sold at periodic auctions where, with a steadily declining cap, they will become scarcer and thus more expensive.  The proponents of the House bill want the cost of these allowances for our sector to be borne by refiners and then passed on to our customers   These increasingly expensive allowances will essentially become a hidden tax on the American driver that escalates upward annually.

Although U.S. refineries are essential to the operation of our economy, the manufacture and use of transportation fuels accounts for approximately 40% of US GHG emissions, the House bill provides just over two percent (2.25%) of allowances to the domestic refining sector, and even these are phased out over time.  This is unfair and must be corrected before legislation in this area can move forward.  Unless this problem is remedied, it will drive consumer costs up.  To minimize these impacts, Congress must provide a larger share of allowances to our industry and customers.

Because it’s so important to help ensure climate change legislation is done ‘right’ rather than merely being done quickly, Tesoro created this website and I’ve added this personal blog to help our customers, investors, employees and the public better-know what the key fuel-related issue are about.  Climate change is a big deal and legislation to address it will have far-reaching consequences in all of our lives.  You deserve to know what is being proposed and what it will actually do instead of just what proponents hope it will.  I hope you find it to be helpful, and ask you to stay apprised and involved.