ConocoPhillips believes the American Clean Energy and Security Act (also known as Waxman-Markey), passed by the U.S. House of Representatives on June 26, contained many elements intended to balance greenhouse gas emissions reductions with economic growth and national security needs. However, we do not believe it fully achieved this goal. Specifically, our major concerns with this lengthy and complex legislation relate to the fair treatment of three areas:

1. Refining. The House bill did not provide fair and equitable treatment for U.S. refiners within a program that provides other energy-intensive, trade-exposed industries with free carbon emissions allowances. The impact could mean the shifting of jobs out of the United States to countries that are not regulated. Waxman-Markey has been estimated to cover 100% of compliance costs for other energy-intensive, trade-exposed industries, but less than 40% for refining in the early years. We believe that climate change legislation should treat all energy-intensive, trade-exposed industries equitably.
2. Transportation consumers. Under Waxman-Markey, transportation consumers will pay a significant portion of the compliance cost of an economy-wide cap and trade program, about 40% in 2012. There should be allowance value in the bill dedicated to helping transportation fuel consumers transition to a low-carbon economy, like there is for other consumer groups. We believe that allowances for transportation fuel consumers should be proportionate to those for other consumer groups. And, value from the transportation sector should be used in the transportation sector to cushion costs and invest in low carbon technologies.
3. Natural gas. The United States has an abundance of natural gas, which is nature’s cleanest fossil fuel. Natural gas reserves are abundant in the United States, and 85% of the country’s needs are supplied here at home. It also is the cheapest source of power and can be built quickly as demand grows. For all these reasons, natural gas should be seen as an important part of lowering greenhouse gas emissions cost effectively. Despite all of these attributes, the House bill disadvantages this clean, domestic resource.

ConocoPhillips believes it can influence smart policy solutions by working with the U.S. Climate Action Partnership (USCAP), trade associations like the American Petroleum Institute (API), and government. While not all of these groups agree on every single point, we all agree on one thing – the importance of prompt enactment of U.S. national legislation to address the growth of greenhouse gas emissions while at the same time ensuring the availability of secure, affordable and reliable energy. We want to have a seat at the table for this important legislative work, and continue to have discussions around the three items noted above.