Killing Clean Energy Laws

Tom Corcoran watched incredulously late last February as political turmoil in Libya shot global oil prices skyward. The situation was "intolerable," he said at the time, sipping coffee at a member's only club for Republican legislators and their supporters in Washington, DC.

Corcoran, a former Congressman from Illinois turned oil industry lobbyist, refused to accept that the "lifeblood" of the U.S. could be so vulnerable - that panicked international investors, speculating on civil war in North Africa, were driving up the cost of crude oil.

"I think that's a dangerous situation and one which the United States should address," the 71-year-old Corcoran explained in a slow, gentlemanly drawl.

The multinational oil companies he helps represent on Capitol Hill include descendants of the most powerful corporations in global history. Over the past few decades they, too, have been forced to reckon with events far beyond their control including depleting oil fields and state-led power grabs that now push them ever deeper into the frigid petroleum reserves of the Canadian province of Alberta.

Oil sands - or tar sands - from this western province have enabled Canada to become the largest supplier of crude oil to the U.S., shipping roughly one million more barrels per day than Saudi Arabia. Yet even as concern mounts that fossil fuels are damaging the climate, this rapidly growing industry is producing some of the most emissions-heavy gasoline, diesel, and jet fuel on the planet.

"Significantly higher than ... conventional fuels," is how a recent European Union-commissioned study explained oil sands' carbon footprint.

Corcoran, head of a lobbying and legal services firm, insists that the U.S. economy simply couldn't function without rapid development of oil sands and other high-carbon fuel sources. But some policymakers, worried about a rapidly warming planet, find that an alarming proposition.

"The development and expanded use of these fuels could significantly exacerbate global warming, with highly dangerous effects," Henry Waxman, a Democratic congressman from California, wrote in 2008. He and others in Congress have supported major clean energy laws that target Alberta's oil sands industry.

Corcoran's job is to kill those laws, and he is financed "by all the major oil and pipeline companies," he says. They are willing to spend tens of millions of dollars each year lobbying Capitol Hill alongside their high-ranking allies in the Canadian and Alberta governments.

With many clean energy laws now blocked, deleted, or delayed, Corcoran radiates a cool confidence. "We've been successful," he says, leaning far back in his chair at one of the most exclusive Republican social clubs in the U.S.

Thick as Thieves

Barely a decade ago, most industry experts considered Alberta's oil sands a promising but marginal energy source. It was too costly to be developed on any major scale, and profits were too low to draw many of the big oil companies. Now, rapidly rising oil prices are causing the industry to explode virtually overnight, hurling Alberta into the upper ranks of global petroleum suppliers.

The crude oil produced from the sands is not the smooth-flowing kind that bursts from the ground with the hit of a pick-axe. It comes instead in the form of bitumen, a sludgy mixture of clay, sand, water and oil.

Some producers bulldoze miles and miles of boreal forest, mining the substance with industrial-scale shovels and dump-trucks the size of small buildings. Others melt it out of place by pumping high-pressure steam and toxic chemicals deep underground.

Even then the hockey puck-like gunk won't flow through pipelines until it's been heated to extremely high temperatures or diluted with natural gas condensate, a volatile hydrocarbon that contains cancer-causing benzene.

There is high heat, too, in the debate about the environmental impact of tar sands extraction. "The total picture," University of Alberta water ecologist David Schindler wrote in 2008, "reveals that we have the Guinness World Record for environmental disaster on our hands." Greenpeace Canada's website agrees: "Rapid development of the tar sands could tip the scales toward dangerous and uncontrollable climate change."

While oil sands supporters admit that bitumen requires more energy to extract than higher quality crude oil from places like Texas or Saudi Arabia, they disagree about the numbers.

The Alberta government claims that a recent European Union study concluding that greenhouse gas emissions are a full 23 percent more per barrel used out-of-date figures. Alberta puts bitumen's carbon footprint at only 5 to 15 percent higher than conventional oil. "Frankly, we just feel on the surface it's just unfair," Alberta energy minister Ron Liepert told Canadian media.

For the U.S., with its notoriously fossil fuel-dependent economy, this brand new source of energy has created a complex dilemma. Environmentalists fear that cranking open the taps could wash away any chance of meaningful action against climate change. Some politicians, however, counter by pointing to the political and military risk of relying on oil from the Middle East and other prickly or unstable areas. They see salvation in privileged access to the planet's second biggest oil reserves -- in friendly Canada.

Deep Inside Republican Territory

With a large painted portrait of George W. Bush hanging in the lobby and two wood-carved elephants flanking the entrance, there was no mistaking Washington's Capitol Hill Club for anything other than a Republican stronghold. (The Repuplican party mascot is an elephant) Fresh from last December's midterm election gains, two key architects of the Tea Party movement -- Koch Industries' David Koch and Americans for Prosperity's Tim Phillips -- invited new Republican legislators to a welcome party here.

A few months later, on a crisp, bright morning late last February, Corcoran and I took the elevator downstairs to the Auchincloss Grill: Imagine a cross between a sports bar, Royal Canadian Legion hall, and a rich friend's dad's basement. During a lengthy interview over coffee at this members-only enclave, Corcoran outlined victories and defeats spanning years of lobbying campaigns, explaining in precise detail his role "as catalyst" in ensuring that the U.S. stays reliant on Albertan oil.  

The oil industry lobbyist, who heads a fossil fuel advocacy firm funded by such energy heavyweights as Exxon Mobil and ConocoPhillips, is a little-known but key player in this debate. Born in 1939 in the rural community of Ottawa, Illinois, he rode a yellow school bus each day past farmers' fields. As he tells it, there's little distinction between U.S. national security, personal freedom, and an abundance of fossil fuels. Oil helped "people do what they want."

Corcoran hasn't served in politics since 1984, the year he resigned after four terms as Illinois congressman, but his Republican allegiances still run deep. It was under President Bush after all, that the U.S. enacted the 2005 Energy Policy Act, a piece of legislation designed to "reduce the growing dependence of the United States on politically and economically unstable sources of foreign oil imports." With the nation's conventional oil fields running closer to dry each year, the act contained a directive encouraging the full-bore development of oil sands, oil shale, and heavy oil reserves.

These "unconventional" resources lie in vast quantities across North America, yet are largely untouched owing to cost, complexity, and environmental impact. For Corcoran, a true believer in the legislation, here was the answer to U.S. energy needs, a clear alternative to "dangerous" Middle Eastern oil.  

Frustrated by years of political inaction, Corcoran joined forces with the American Petroleum Institute - the nation's most powerful fossil fuel lobby group - and other oil industry players in 2007 to form the Center for Unconventional Fuels, renamed more blandly the next year as the Center for North American Energy Security (CNAES).

Three years later, the group's website has yet to be activated. "Nothing against the internet, it just didn't fit our needs," Corcoran explained. "We're not doing public outreach, we leave that to others."

Instead CNAES concentrates on its mandate: keeping the goals of the Energy Policy Act alive, said Corcoran. And its goal, according to a CNAES document under Corcoran's email address, "was to create a single organization to coalesce unconventional fuels advocates in all of the affected private and governmental sectors around a unified program to advance the development and use of ... Heavy Oil, Tar Sands, Shale Oil, Coal-to-Liquids and Enhanced Oil Recovery."

"It ought to be a matter of national policy to develop these fuel sources," he said.

By early 2008, the center would declare war on the first clean energy law standing in its way.

But before that happened, Corcoran would make an important realization: fossil fuel deliverance for the U.S. lay just 620 miles north of the Montana border.

Battle of the Bitumen

Alberta's oil sands are an experiment in motion: the largest unconventional oil development in human history. The industry pumps roughly one million barrels of crude a day through trans-border pipelines to the U.S., an amount which could more than quadruple in the next 20 years.

All that energy security comes at a cost. The strip-mined panoramas and duck-killing toxic lakes north of Fort McMurray were compared by one United Nations official to the grim devastation of Tolkien's Mordor. Despite some advances in energy efficiency, the industry is still Canada's fastest growing source of greenhouse gas emissions. By 2020, estimated the Calgary-based Pembina Institute, it could be emitting double the carbon now released by New York City.

But if emissions are large, so too are investment opportunities. An industry report, released last January by Peters & Co., projected roughly $180 billion in new investments during that same period. That kind of rapid expansion can be explained by several factors: depleting conventional oil fields, insatiable U.S. demand, relatively low royalty rates.

Yet a less obvious geopolitical revolution is also driving investment. For much of the 20th century, the global oil market was dominated by an informal oligopoly of energy firms known as the "Seven Sisters."
Until the 1970s, these private corporations - with headquarters in the U.S. and Europe - controlled 85 percent of global oil reserves. They grew to be some of the wealthiest and most powerful companies ever created, all but dictating their terms to foreign governments. Until the early 1960s, when, led by Venezuela and Iran, oil producing countries began seizing control of their energy resources - and kicking out the Western corporations.

Current Sisters-descendants Exxon Mobil, Shell, BP and Chevron - alongside fellow heavyweights ConocoPhillips and Total - now have unrestricted access to only 7 percent of the world's remaining oil fields.

Though still among the richest companies on the planet, they've grappled for years with stagnating shareholder returns, an indication their growth has plateaued. These companies are now shovelling billions of dollars into Alberta's oil sands, one of the few major deposits where they are still welcome.

"[They] just don't have all that many options," said Alexandros Petersen, research director for the London-based Henry Jackson Society, a global studies think tank. "And so if you get boxed out of places like Venezuela -- or Angola by the Chinese -- you go after whatever you can get. The oil sands are one of those 'whatever-you-can-get' places."

So when Democratic members of Congress, worried about the growing reliance of the U.S. on climate-damaging fuel sources, began targeting the industry in December 2007, they met a fierce opposition. One of the first attacks on the oil sands came from Waxman. Working in conjunction with the Natural Resources Defense Council - a major U.S. environmental group - the Democrat inserted a contentious clean energy provision into the 2007 Energy Security and Independence Act.  Known simply as Section 526, it forbade the U.S. government from buying fuel with high carbon footprints.

"This provision ensures that federal agencies are not spending taxpayer dollars on new fuel sources that will exacerbate global warming," Waxman wrote in May 2008, making clear mention of the oil sands.

Since Canada has an enormous stake in the success of Alberta's energy resources, its U.S. embassy sounded a warning call in early 2008, flagging Section 526 to the American Petroleum Institute, Exxon Mobil, BP, Chevron and others, according to internal government emails.

"As yours is a company involved in the production of oil sands in Canada," then-energy counselor Paul Connors wrote to an Exxon Mobil lobbyist, "I wanted to bring this issue to your attention."

It wasn't long before Corcoran, too, learned of the threat to unhindered oil sands exploitation. Now, the lobby group he'd help found the year before - the Center for North American Energy Security - had a clear mandate: Kill Section 526.

With the support of members such as Exxon Mobil - spender of $29 million in 2008 to lobby Capitol Hill - Corcoran's group soon launched an intensive lobbying campaign, working closely alongside the American Petroleum Institute and Canadian embassy. The former Republican congressmember identified key policymakers, committees and congressional staffers potentially unsympathetic to Section 526.

"Then we talked to those people to a) alert them it exists; b) explain why it was a mistake; c) try to get support to repeal it," Corcoran tells me. "That was the process we embarked on in 2008."

He began to see results. That spring, two Republican congressmembers from Texas proposed a repeal of the law. "[Section 526] has powerful and harmful implications and needs to be repealed immediately," wrote Jeb Hensarling and Mike Conaway.

Identical legislation appeared the next month in the Senate, courtesy of Republican James Inhofe.
Despite non-stop attacks ever since - including a current repeal attempt introduced by Republican congressman Devin Nunes - Section 526 still stands. (Though an ongoing lawsuit launched by the Sierra Club and the Southern Alliance for Clean Energy may yet decide its fate).

Corcoran had better luck defeating another clean energy law proposed in 2009.

For years, Washington policymakers had attempted to enact something called a low carbon fuel standard.
First adopted by California in 2007, the law discourages suppliers from selling fuel with high carbon footprints, a clear incentive, proponents hope, for broad clean energy investments. If ever enacted on a national level, it could be equivalent to taking 30 million cars off the road by 2020, according to research cited by then-Senator Barack Obama in 2007.

And it might also wipe out the market for Alberta's high-carbon road fuels, dealing the industry a huge financial blow.

In 2009, as House legislators considered including a low-carbon standard in a major climate change package, the Waxman-Markey bill, Corcoran's lobby group issued briefing notes targeting legislators from oil-rich states such as Texas and Oklahoma. In them, the Center for North American Energy Security warned that the standard would be "a severe self-inflicted wound to our national security and economic recovery." CNAES also talked to local constituents and got them to add to the pressure.

Soon enough, proponents of the Waxman-Markey bill realized their legislation wouldn't have enough votes to make it past the committee stage. "So they deleted the low-carbon fuel standard," Corcoran explained, "and then the legislation moved out of committee." The Senate, too, dropped a proposed low-carbon fuel standard after comparable pressure.

All the while, Corcoran noted, the Canadian and Alberta governments were following the process closely.
"They were aware of what we were doing and supportive of it," he said, adding: "I'm not suggesting it was only the Center for North American Energy Security [that killed both fuel standards]. But I would say that we were a big part of it."

Pipeline Standoff Rages

For all its victories, the oil sands industry still faces what may be its biggest hurdle yet. Anticipating the massive growth rates projected by oil sands producers, Calgary-based TransCanada is pressuring the U.S. State Department to approve Keystone XL, a proposed pipeline stretching 1,980 miles south to Gulf Coast refineries.

Environmentalists and sympathetic members of congress - including Waxman - tout a lengthy list of concerns. Some fear a pipeline rupture could contaminate the Ogalalla aquifer, source of drinking water for millions in the midwestern states of the U.S.

At an ongoing 45-day public comment period ending in early June, expect green observers to argue against increasing U.S. reliance on high-carbon Alberta crude. Expect also to see Corcoran's group downplaying those concerns, framing the pipeline as a vital piece of U.S. energy security.

Whether or not Keystone is approved, there are already enough trans-border pipelines to satisfy growing U.S. demand for oil sands until at least 2020, according to a recent Department of Energy report.

But the not-so-hidden subtext is that Keystone XL represents a proxy war over the oil sands industry itself.

"If the U.S. government says 'yes' to Keystone XL, they're basically saying 'sure' to continued industry expansions," said Danielle Droistch, U.S. representative for the Calgary-based Pembina Institute, a Canadian environmental group.

Whatever Secretary of State Hillary Clinton decides by the end of 2011 -- when her decision is due -- the oil sands industry still has plenty to celebrate.

The collapse of the U.S. Senate's climate change legislation last summer lessened pressure on the Canadian government to impose its own greenhouse gas restrictions. Then the US midterm elections in December installed a wave of Republican legislators arguably more sympathetic to Albertan oil.

Current instability in the Middle East and North Africa (added to BP's Deepwater drilling disaster and the Fukushima nuclear debacle) have only made the extraction of Canadian energy more attractive.

But Corcoran's work is far from done. His group is currently suing the California government to repeal its low carbon fuel standard. And the Center for North American Energy Security continues to intervene in the U.S. northeast, where 11 states are considering similar legislation.

Unlike the civil war rocking Libya thousands of miles away, these are battles Corcoran can hope to influence, and even win. Of course, success often depends on how you define it.

"It's wrong to think of this in war metaphors as though you have different sides," said Susan Casey-Lefkowitz, international director for the Natural Resources Defense Council. "If we can't fight climate change, we all lose. Corcoran loses too."

Geoff Dembicki reports extensively on the growing political influence of Alberta's oil sands industry and other climate change-related issues for TheTyee.ca, an award-winning online newspaper based in Vancouver, Canada.

• 183 Environment