Karen Matusic | 202.682.8118 | matusick@api.org
WASHINGTON, May 5, 2008 – Climate change legislation pending in Congress could significantly reduce clean-burning natural gas production and send refining production and jobs overseas at a time the nation needs more supplies of all energy sources, according to a report released today by API.
The study, prepared by ICF International and commissioned by API, also estimates that the increased cost of fuel production could result in a shift, as of 2020, of an estimated three million barrels per day of U.S. refining production overseas where foreign refiners would not be required to account for greenhouse gas emissions related to their operations as they would in the U.S. Neither of these impacts identified by ICF is apparent in a Lieberman/Warner analysis conducted by the Energy Information Administration.
ICF looked at the potential supply-side impacts of the Lieberman-Warner cap-and-trade climate bill. It estimated that oil and natural gas companies could be required to spend almost $23 billion for allowances for facility greenhouse gas emissions and another $183 billion for allowances for emissions from consumer use of fuels in the year 2020. For exploration and production, this new cost burden for facility emission allowances alone is estimated to reduce gas well drilling more than 30 percent by 2020, effectively cutting natural gas production volume by as much as 12 percent by 2030.
While the ICF study didn’t look at the direct impact of the bill on consumers, the EIA last week said the bill would “increase energy prices and energy bills for consumers” and “increase the cost of using energy, which reduces real economic output, reduces purchasing power, and lowers aggregate demand for goods and services.”
The studies underscore the need for Congress to take a balanced approach to energy and climate change policy, API President and CEO Red Cavaney said. Cavaney said the oil and natural gas industry has been addressing the climate change issue through deep investments in alternative energy and emission mitigation technology and through energy efficiency operations in its own operations.
“We all have a role to play on energy and climate – industry, government and consumers – and we all need to work together to successfully meet these challenges,” Cavaney said. “This particular legislation would be difficult to implement and could lead to less domestic natural gas and fuel production at a time America’s consumers will need more, not less, supplies of reliable energy.”
Updated: April 9, 2009