Leaked: The Oil Lobby’s Conspiracy to Kill Off California’s Climate Law

You remember Fillmore. He’s the resident hippie of Radiator Springs in the Pixar blockbuster Cars. Much to the chagrin of his neighbor, Sarge the Army Jeep, Fillmore greets each new day with Jimi Hendrix’s Woodstock rendition of A Star Spangled Banner—“respect the classics, man”—and is quick with a conspiracy theory about why biofuels never stood a chance at America’s gas pumps. Perfectly voiced by the late, great George Carlin, Fillmore has a slight paranoiac edge, as if his intake of marijuana may exceed what’s medically indicated.

Well, as they say, it’s not paranoia if they really are out to delay, rewrite, or kill off a meaningful effort to reduce the build-up of carbon in the Earth’s atmosphere. APowerpoint (MSFT) deck now being circulated by climate activists—a copy of which was sent to Bloomberg Businessweek—suggests that there is a conspiracy. Or, if you prefer, a highly coordinated, multistate coalition that does not want California to succeed at moving off fossil fuels because that might set a nasty precedent for everyone else.

Created by the Western States Petroleum Association (WSPA), one of the most powerful oil and gas lobbies in the U.S., the slides and talking points comes from a Nov. 11 presentation to the Washington Research Council. The Powerpoint deck details a plan to throttle AB 32 (also known as the California Global Warming Solutions Act of 2006) and steps to thwart low carbon fuel standards (known as LCFS) in California, Oregon, and Washington State. Northwest Public Radio appears to have been the first to confirm the authenticity of the deck, which Bloomberg Businessweek did as well, with WSPA spokesman Tupper Hull.

Specifically, the deck from a presentation by WSPA President Catherine Reheis-Boyd lays out the construction of what environmentalists contend is an elaborate “astroturf campaign.” Groups with names such as Oregon Climate Change Campaign, Washington Consumers for Sound Fuel Policy, and AB 32 Implementation Group are made to look and sound like grassroots citizen-activists while promoting oil industry priorities and actually working against the implementation of AB 32.

The deck also reveals how WSPA seized on a line from a California Air Resources Board memo that the cap-and-trade program for gas and diesel that goes into effect on Jan. 1, 2015, may affect gas prices in order to launch an ad campaign warning of a “hidden” gas tax that devious Sacramento pols are sneaking through.

“The environmental community is used to sky-is-falling analysis from fossil fuel interests in response to clean energy initiatives, so that part isn’t surprising,” says Tim O’Connor, a senior attorney at the Environmental Defense Fund, to whom I sent the deck for comment. “But it’s eye-opening to see the lengths [the WSPA] has gone to push back rather than move forward. I don’t think anybody knew how cross-jurisdictional, cross-border, and extensive their investment is in creating a false consumer backlash against [climate legislation].”

In California, O’Connor points out, “we have 70 percent voter approval on clean energy alternatives, so it’s offensive and atrocious they’re using these supposed everyday citizens—who are really paid advertisers—to change the public discourse.”

Reheis-Boyd’s Powerpoint deck, entitled “WSPA Priority Issues,” starts by announcing that these are the “the best of times.” Crude oil production in the U.S. is higher than it has been since 1997, with imports subsequently reduced to a 20-year low, according to the American Petroleum Institute. The next six slides describe why these are also “the worst of times” and include images of demonstrators protesting the Keystone XL oil pipeline, demanding government action on climate change, and pictures of professor-cum-activist Bill McKibben and billionaire Tom Steyer, with the latter quoted as saying he wants to “destroy these people”—i.e., people like the members of WSPA.

Then there’s a slide with all the different groups that WSPA has funded to make it seem as if there’s a broad group in three states opposing a series of initiatives to reduce carbon pollution from fossil fuels. The most clever of these is the “Stop the Hidden Gas Tax!” campaign. Who, after all, wants that?

“Let me be clear,” says Hull, the WSPA spokesman. “We did not oppose AB 32 when it passed. We believe it’s good to have the reduction of greenhouse gases as a goal. We support that goal.” In the years since, he says, “hundreds of pages of regulations have been added to what had been a page-and-a-half document, and we do object to many of the additions.” What’s more, Hull says, “we have a legitimate concern over what will happen when the cap-and-trade program goes into effect for gas and diesel.”

Hull describes AB 32 as “a stool with three legs”: cap and trade for stationary power sources (already in effect); low carbon fuel standards (which he characterizes as too aggressive); and the cap-and-trade program that goes live on Jan 1. “Lots of people—drivers, small business owners—don’t realize that they may be impacted by this.” Hull insists that WSPA has not created any opposition groups but has funded those that share its sincere concerns.

Like the rest of us, corporations determine from time to time that their concerns are being overlooked or misunderstood by lawmakers, and they may wish to improve things by correcting the record, getting their stories told. Hull is surely right that how cap and trade will affect everyday motorists deserves greater study. But the reason environmental activists are excitedly swapping the WSPA deck via e-mail is because it is not about correcting the record. The deck clearly describes a strategy to confuse people about an important law that has already passed and to prevent the enforcement of regulations that represent an effort—however imperfect—to reduce the risk of catastrophic effects from global warming.

Is it a coincidence that this strategy, backed by millions of dollars, promotes a consumer backlash against climate policy in three of the states nearest to having cleaner alternatives to liquid fossil fuels at most gas stations? Go ask Fillmore.

Unmasked: The Oil Industry Campaign to Undermine California’s Clean Energy Future

  • A variety of climate and clean energy measures that are part of California’s landmark Global Warming Solutions Act of 2006 (AB 32) are reducing California’s oil dependence, transportation costs, and pollution-related health bills. But with the petroleum fuels sector scheduled to begin paying for its portion of climate pollution in January 2015, oil companies have intensified their campaign to undermine the clean energy policies that will reduce their market share.
  • NRDC has identified at least eight front groups appearing to be grassroots organizations speaking for consumers or broad coalitions, but they have strong ties to the oil industry. Oil companies such as Chevron, Shell, ExxonMobil, BP and ConocoPhillips are working against California’s clean energy policies, often through the industry’s trade association, the Western States Petroleum Association (WSPA).
  • The oil companies’ campaign to maintain their profits and continue California’s dependence on petroleum-based fuels has been supported by more than $70 million of oil money spent on lobbying in California since 2009.
  • Reversing or delaying the scheduled inclusion of transportation fuels — which account for nearly 40 percent of California’s climate pollution — under the state’s emissions cap, as the oil industry and its front groups advocate, would undermine clean energy progress, keeping Californians more dependent on oil and more vulnerable to roller-coaster gas prices.

California’s Climate Policies Reduce Dependence on Oil

California’s Global Warming Solutions Act (AB 32) has put the state on a pathway to reduce harmful carbon pollution to 1990 levels by 2020 and beyond. By 2030, AB 32’s clean energy policies will enable California to:

  • Save more than $2,000 per household on gasoline each year due to more efficient cars that go farther on a gallon, greater fuel competition, cheaper fuels like clean electricity, and better access to transit;
  • Reduce carbon pollution by 150 million tons every year compared with business as usual, which is equal to halving the emissions of all cars and trucks on the road in California;
  • Eliminate 14 billion miles driven annually, thanks to more sustainable communities with walkable neighborhoods and expanded public transit; and
  • Save well over $8 billion on health care costs due to fewer asthma attacks, cardiac hospitalizations, and premature deaths from poor air quality.

The Oil Industry’s (Renewed) Campaign Against AB 32

California’s transportation fuel providers are slated in January 2015 to join the state’s other major polluting industries (such as power plants and cement factories) already under the cap-and-trade emissions limits. Including the emissions from transportation fuels like gasoline under the statewide cap has been in the works for almost a decade.

The cap-and-trade system places an upper limit on greenhouse gas emissions (cap) and requires polluters to either reduce their pollution or buy or trade a diminishing number of pollution allowances (trade). The proceeds from selling pollution allowances to large emitters fund projects that further reduce emissions in California, and at least one-quarter of the funds must benefit disadvantaged communities, which are disproportionately affected by climate pollution.

Rather than investing in cleaner sources of energy, more efficient production and refining processes, and less-polluting products that would reduce climate pollution and improve air quality for California’s residents, the oil industry has invested in a front group-led marketing campaign to avoid being held accountable for its pollution. Since 2009, the oil companies have spent more than $70 million on lobbying in the state.

A Better Future Is Possible

Despite the oil industry’s opposition, Californians and their elected leaders are engaged in building a better future, with clean and affordable solutions that reduce dependence on oil. AB 32 invests the proceeds from pollution permit sales in programs that will cut carbon pollution and reduce Californians’ fuel bills, with an emphasis on projects that deliver benefits to the state’s most disadvantaged communities. Californians should see the oil industry’s latest campaign attacking AB 32 for what it is: a thinly veiled attempt to maintain their share of the market and avoid responsibility for the fuel sector’s climate pollution.

Big Oil’s ‘Grass-Roots’ Groups in California

pol_climate37__01__970-630x420When oil companies mounted a public campaign in 2010 to roll back California’s nation-leading greenhouse gas restrictions, the effort backfired in a big way: 62 percent of the state’s voters rejected Proposition 23, which would have suspended California’s goal of slashing carbon emissions by the end of the decade. It was a major setback for the industry and strengthened the resolve of environmentalists and politicians to discourage the use of fossil fuels. On Jan. 1, 2015, the state’s cap-and-trade system is scheduled to expand to include gasoline, diesel, and other fuels used for transportation, which the California Air Resources Board estimates are responsible for 36 percent of greenhouse gas emissions.

Once again the oil industry is suiting up. The restrictions will cripple the economy and cost jobs, lobbyists say. But instead of making a direct plea to the public for support to delay or repeal the changes, oil companies are quietly working to make it look like Californians are spontaneously rising up in protest against the climate standards. In recent months, groups have popped up that appear to be grass-roots organizations started by ordinary people opposed to the rules. In fact, they’re paid for by the oil industry.

The most active group, the two-month-old California Drivers Alliance, describes itself on its website as a “movement of motorists, small businesses, fuel providers, and consumers.” It’s been running a slew of online ads, radio spots, and bold-faced ads in newspapers across the state, urging readers to “Stop the Hidden Gas Tax.” Mirroring an oil industry claim, the ad says the regulations will “increase the cost of gas between 16¢ and 76¢ per gallon.” One online video features a Hispanic mother of two who says she works for a nonprofit that helps immigrants and can’t afford to drive her car to work. “Many Latino families who only make minimum wage, we just honestly can’t afford for gas prices to go higher,” she says.

Asked where the alliance gets its money, spokesman Jerry Azevedo says the group’s funding comes from the Western States Petroleum Association, whose members include BP (BP)Chevron (CVX)ExxonMobil (XOM), and Shell Oil (RDSA:LN). He wouldn’t say how much money the alliance had received. WSPA didn’t reply to numerous messages seeking comment.

Another group, Fed Up at the Pump, says it’s a “grass-roots coalition of consumers, businesses, and advocates who are concerned about the negative impacts that a hidden, regressive gas fee will have on California.” It started a letter-writing campaign this year targeting Democratic Governor Jerry Brown. Like the alliance, it stresses the prospect of gas price hikes using the same numbers and wording—that Californians starting next year will pay up to 76¢ more per gallon. “Governor Brown,” concludes a prewritten letter people can send through the group’s website, “you must find a way to address climate change without hurting those of us already struggling to get by.”

In a recent poll, 76 percent of Californians supported the greenhouse rules …

Fed Up lists retail, manufacturing, farming, and trucking groups among its four dozen members. The four-month-old organization is the creation of a petroleum trade group called the California Independent Oil Marketers Association, which is made up of small and midsize oil distributors and retailers. Jay McKeeman, a spokesman for the California Independent Oil Marketers Association and for Fed Up, says the group’s goal is to pressure Brown to delay the January rules. “Let’s have a public debate about this with full participation of fuel consumers,” he says.

The groups echo the oil industry’s contention that the regulations amount to a “hidden gas tax”—though there’s not much hidden about it. In 2010 a California Air Resources Board report publicly estimated that cap-and-trade rules could raise gas prices 4 percent to 19 percent by 2020. The oil groups applied those percentages to today’s gas price of $4 per gallon to arrive at the ubiquitous 16¢-to-76¢ figure.

Severin Borenstein, a professor at the University of California at Berkeley’s Haas School of Business, says those numbers don’t add up. A study he conducted in August puts the price increase at 9¢ to 10¢ per gallon, the difference between driving a car that gets 30 miles per gallon instead of 31. “There’s a lot of hyperbole coming out of the oil industry,” he says. Azevedo of the California Drivers Alliance sticks by his group’s numbers and says, “We’d welcome a new analysis from the Air Resources Board.”

The climate rules, signed in 2006 by Republican Governor Arnold Schwarzenegger, require the state to reduce its greenhouse gas emissions to 1990 levels by 2020. The industry’s stealthy campaign to reverse or slow the regulations appears to be a long shot at best. A bill that would have delayed the January rules died in the state senate in August in the face of public support for the regulations.

… but that number dropped to 39 percent if it meant higher gas prices

The oil-backed groups have shrewdly focused their efforts where support for the rules is softest: low- and middle-income Californians who worry about high gas prices. Overall the climate policies remain very popular—76 percent of Californians agree that oil should be included under the new greenhouse gas rules, according to a July poll from the Public Policy Institute of California, a nonprofit think tank. However, when those people were asked whether they were in favor of the rules if it meant higher gas prices, public support tumbled to 39 percent. For the oil industry and its proxies to have a chance at getting what they want, says Mark Baldassare, president of the policy institute, “this has to be about working families.”

http://www.businessweek.com/articles/2014-09-04/californias-carbon-laws-oil-companies-fund-grass-roots-revolt