The Next Economy
CA Business Leaders Call For Oil Industry to Comply with CO2 Law

More than a thousand California business leaders are urging the State to deny requests to exempt oil companies from its cap and trade program aimed at reducing greenhouse gas emissions.

The California Business Alliance for a Green Economy (CBAGE) is a network of more than 1,280 mostly small and mainstream businesses that support California's efforts to promote clean energy, fossil fuel independence and energy efficiency.

"Hundreds of California businesses have been successfully complying with the state's clean energy law — AB 32 — and the oil industry shouldn't receive a special exemption," said Susan Frank, director of the California Business Alliance for a Green Economy, which recently signed a letter to a handful of lawmakers seeking such an exemption.

With transportation fuels scheduled to come under the cap and trade program effective January 1, 2015, there has been speculation around the implications. But Frank says this concern is based on incorrect information about the state's plan to transition to a clean energy economy — and the ways in which it is already working for Californians.

"There is nothing in AB 32 mandating that gas prices go up or that oil companies must pass on their cost of compliance to California businesses and residents," Frank said. Moreover, while gas prices have been rising nationwide, the continued implementation of AB 32 is significantly reducing overall fuel bills for California business owners and consumers.

For example:

• Even in the context of a growing economy, California retailers sold 523 million fewer gallons of gasoline in 2012 than in 2009, according to the California Energy Almanac. This resulted in millions of dollars that businesses and families could spend elsewhere in the economy.
• By 2020, the average Californian is expected to pay 30 percent less on fuel than they did in 2011, according to the AB 32 Scoping Plan update.

"As California's transportation sector gets more efficient, we're no longer measuring gasoline by the gallon, but by the overall bill, which has been dropping dramatically thanks to more fuel-efficient vehicles consuming far less gasoline," added Frank. The transportation sector accounts for 40 percent of the carbon pollution in the state.

CBAGE says the next step of including transportation fuels under cap and trade will lead to further savings — and job growth — by investing in programs that will give all Californians new transportation choices.

Some oil companies are beginning to buckle under mounting pressure to address climate concerns. Earlier this year, ExxonMobil for the first time agreed to publish a Carbon Asset Risk report describing how it assesses the risk of stranded assets due to climate change. The report will provide investors with greater transparency into how ExxonMobil plans for a future where market forces and climate regulation makes at least some portion of its carbon reserves unburnable.

This was the first successful withdrawal with an oil and gas producer on the carbon asset risk issue this proxy season. The proposal reflects increasing investor concern about the issue of stranded assets and builds on a shareholder initiative coordinated by Ceres, in which shareholders representing $3 trillion in assets under management, asked 45 companies for increased disclosure about whether they are addressing carbon-related risk, the impact on capital expenditure decisions, and whether they are implementing strategies to avoid stranded assets in a carbon-constrained world. Carbon Asset Risk proposals were filed at 10 fossil fuel companies this year.