Some of the nation’s largest oil companies have been raising concerns with congressional Republicans over bipartisan legislation that would study the carbon intensity of nearly two dozen industrial products, including crude oil.
The bill, a modest effort on climate action that would simply require a study, has been maligned by some on the right as a precursor to a carbon tariff and a potential backdoor to a domestic carbon tax.
A version of the bill has already passed the Senate Environment and Public Works Committee. Now, in the leadup to the anticipated introduction of a companion measure in the House, industry is weighing in with criticism.
Five people close to the negotiations around the bill — the “Providing Reliable, Objective, Verifiable Emissions Intensity and Transparency (PROVE IT) Act” — said House Republicans have been contacted in recent weeks by representatives from Valero, Marathon Petroleum and Koch Industries. All were granted anonymity to speak candidly.
Two people involved in discussions said that Valero and Marathon, which operate oil refineries, are nervous that the foreign oil and petroleum processed through their refineries could receive high carbon-intensity scores in the study.
A refining sector executive confirmed the industry has raised concerns on the Hill about “unintended consequences” of tariffs for import and export industries — but denied lobbying against the bill on behalf of any one company.
“We want to make sure those issues are understood and they are at least in the mix as the legislation moves forward,” the executive said.
Koch Industries, which runs several refineries as part of its business portfolio, is listed as lobbying on the “PROVE IT Act” in disclosure forms.
Industry opposition to the proposal, first introduced in the Senate as S. 1863, from Sens. Chris Coons (D-Del.) and Kevin Cramer (R-N.D.), was not previously public.
The pushback against the bill by refiners shows that anxiety about the effort runs deeper than just the gripes from ideological conservatives.
The internal fight over the legislation also comes at a tenuous political moment for Rep. John Curtis (R-Utah), who plans to be the lead sponsor of the measure in the House. He is seeking the Republican nomination for an open Senate seat and the primary is next Tuesday.
Rep. Mariannette Miller-Meeks (R-Iowa), who recently took over for Curtis as chair of the Conservative Climate Caucus, does not plan to support the legislation.
A House Republican aide confirmed a number of Republican offices were contacted by Valero, Marathon Petroleum and Koch Industries in the days following a report by POLITICO’s E&E News that published the names of potential House GOP lawmakers likely to sign on as co-sponsors of the pending House bill.
Those names were obtained through a leaked internal memo from the American Petroleum Institute, which supports the bill. A Miller-Meeks aide later said she would not be an original co-sponsor “if and when” Curtis introduces the bill.
Refiner anxiety
The “PROVE IT Act” would mandate a Department of Energy study of dozens of industrial imports. The idea behind the bill is that it would show the materials produced in the United States have a far lower carbon footprint, underscoring the “U.S. carbon advantage” in trade relationships.
There’s an urgency for the U.S. to come up with its own carbon intensity measurements, supporters say, as the European Union is in the process of implementing a tariff system based on such measurements and the United Kingdom could soon follow.
API, which has been seeking to burnish the green image of its members in the oil and gas industry, supports the bill because it would “demonstrate our industry’s commitment to producing cleaner, safer, and more affordable energy here at home while still supplying the energy our world needs.”
And proponents are quick to stress that this is only a study, and nothing in the bill would necessarily lead to a carbon tariff or tax. It’s also highly unlikely the “PROVE IT Act” will become law any time soon, in an election year with a divided House and Senate.
But it hasn’t stopped oil companies with major refinery operations, like Valero and Marathon, from fretting over how their businesses would be affected on the off chance the effort takes off.
George David Banks, a former Trump administration official who is now a conservative climate adviser, told E&E News that “if a segment of US industry doesn’t want to be covered, we should remove them from the study and any subsequent policy that could flow through it.”
He added, “the main reason to support PROVE IT is to protect US industry from unfair trade practices.”
However, it’s far from clear whether exempting “crude oil” and “refined petroleum products” alone would assuage concerns, let alone whether bill sponsors would support that move.
People familiar with the dynamic also said Valero and Marathon Petroleum are warning of a “trade war” resulting from the legislation. The companies declined to comment on their engagement.
‘Good economic policy’
Koch Industries did not respond to a request for comment, but people tracking the public debate say the enormous energy and refining corporation that has poured billions of dollars into conservative advocacy over the years isn’t opposing the bill for its substance.
Rather, they say, Koch’s opposition to the “PROVE IT Act” is an extension of its long-simmering disagreements with Trump administration trade policies.
At a recent POLITICO Energy Summit, Cramer said that former President Donald Trump told him he “loved tariffs” in response to being pitched on the legislation. Bob Lighthizer, who was Trump’s U.S. trade representative, is also supportive of the concept of carbon tariffs.
Sen. Bill Cassidy (R-La.), a backer of the bill, said, “This basically looks like it’s going to be Trump policy. Trump just said something about how he’d like to reduce taxes and make up for it with tariffs. It’s good economic policy.”
Earlier this week, the pro-fossil-fuel American Energy Alliance went up with a $100,000 digital ad campaign attacking Curtis. The “advocacy initiative” urged Utah voters to tell Curtis “no back door energy taxes.”
Some “PROVE IT Act” advocates have questioned whether AEA is acting on behalf of the refining industry. It’s an accusation AEA President Tom Pyle denied, but he did say in an interview he was “very glad to hear that they are engaging and hope more industries join them.”
Pyle also argued that the Republican authors of the “PROVE IT Act,” specifically Curtis, are the only ones who won’t admit “that this is a precursor to a carbon tariff.” He rejected the notion Trump would be supportive.
It’s not clear when Curtis and his Democratic co-sponsor, Rep. Scott Peters of California, will introduce their companion bill, which they have been working on for months.
One energy consultant, assessing the political terrain for Curtis amid the backlash over the “PROVE IT Act,” said that it might have been for the best that he held off on introducing his bill ahead of a closely fought primary election.
“I think at the end of the day he wants to win a Senate seat,” the consultant said. “No House bill introduction is worth that.”
