August 4, 2009
By Ayesha Rascoe
WASHINGTON (Reuters) - Ailing U.S. oil refiners could face a crippling period of contraction under a House-approved climate change bill, making the country more dependent on imported refined products.
The so-called cap-and-trade bill narrowly passed by the House of Representatives in June would limit greenhouse gas emissions by requiring polluters to acquire permits for the carbon dioxide they spew into the atmosphere.
To soften the blow, industry would initially be granted free permits covering 85 percent of emissions. But the refining industry managed to get only 2 percent of the allowances, leaving them vulnerable to encroaching foreign companies.
U.S. refiners say it is unfair they would receive just 2 percent of permits, while utilities won 30 percent of permits initially, covering most of their emissions. . .
The additional environmental costs for U.S. refiners may make it harder to attract investment dollars to improve aging, less-efficient refineries, said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University in Texas.
"I think you're going to see more capital directed at refineries where the returns are higher, which are the newer, larger refineries overseas," Bullock said.
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