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ConocoPhillips to offset GHG from Calif. refinery expansion

ConocoPhillips will offset 500,000 metric tons of carbon dioxide a year generated by the planned expansion of a San Francisco Bay area refinery, California Attorney General Jerry Brown (D) announced today.

In 2005, ConocoPhillips proposed expanding its Contra Costa County refinery to include a hydrogen plant to process heavy crude more cleanly. The county issued an environmental impact statement in April 2007, concluding that the project's estimated emissions of 1.25 million metric tons of CO2 did not require mitigation.

But Brown challenged the county's approval of the expansion last May on grounds that it did not take the plant's greenhouse gas emissions into account, as the California Environmental Quality Act requires.

In exchange for Brown dropping the appeal, ConocoPhillips will pay the Bay Area Air Quality Management District $7 million to offset the hydrogen plant's initial expected emissions of 500,000 metric tons per year through 2012, when the state's global warming law (A.B. 32) is set to go into effect.

The district and the attorney general must agree on a distribution plan for the funds by June 2009. The payment could be reduced by $25 a ton if ConocoPhillips manages to reduce emissions in other ways, as determined by an energy efficiency audit that is also part of the settlement.

In a statement, Brown said the agreement marks the first time a U.S. oil company will offset greenhouse gas emissions from a refinery expansion. ConocoPhillips did not return a call seeking comment.

ConocoPhillips will also close its Santa Maria refinery's calciner plant by the end of the year. The Santa Barbara County waste treatment plant emits 70,000 tons of CO2 annually.

The company also agreed to pay $2.8 million to a reforestation program run by nonprofit American Forests and $200,000 to the Audubon Society for wetlands restoration in San Pablo Bay.

Brown settled with San Bernardino County last month over a similar issue. The county agreed to estimate its 1990 and current greenhouse gas emissions and their sources, as well as to project how the county's land-use decisions would affect emissions in 2020 (Greenwire, Aug. 21).