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Four oil refiners spending a lot to undo the 1631 Initiative would likely avoid hundreds of millions of dollars in greenhouse gas emission rights if voters rejected the proposal.
Four oil companies that operate refineries in Washington have invested more than $ 25 million to defeat the 1631 initiative, the carbon tax recorded in the fall ballot.
If the initiative failed, this investment would be very profitable. Over the next decade, companies would avoid hundreds of millions of dollars in estimated greenhouse gas emissions from their Washington refineries, according to an analysis of the Department of Ecology's records. l & # 39; State.
These carbon dioxide and other emissions result from the process of producing petroleum fuels, requiring energy, which requires large amounts of heat.
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Contributions to the BP, Phillips 66, Andeavor (now held by Marathon Petroleum) and US Oil and Refinery Campaigns represent over 85% of the total funds raised during the most costly opposition campaign Of the history.
Their refineries produce fuel for Washington, other states and international exports.
Collectively, they generated 4.6 million metric tons of greenhouse gases during refining operations in 2016, the latest year for which data are available.
If these emission levels persist, the four oil companies will pay close to $ 70 million in annual carbon pollution charges for their refining activities in 2020. As royalties increase gradually, this bill will double from here 2030.
Fees collected on refining operations add to those that the initiative slaps on most transportation fuels that oil companies sell for use in the state. Gasoline and diesel fuels release carbon dioxide when they fuel cars and trucks and are the largest source of state greenhouse gas emissions from fossil fuels.
Overall, the 1631 Initiative is expected to generate more than $ 1 billion annually by 2023 through royalties levied on oil, gas and certain coal energies. This money would be invested in reducing the state's greenhouse gas emissions and adapting to climate change driven by the global use of fossil fuels.
Currently, Washington's main source of fossil fuel consumption is a tax of 49.4 cents per gallon on fuel, which is paid for by suppliers and reflected in gas stations on stickers provided. by the state on the pumps. Washington has the second highest fuel tax in the country. It collects about $ 1.7 billion a year for spending on national roads and ferries.
This is the second time Washington voters decide to set a price for carbon dioxide, methane, and other greenhouse gases released by the burning of fossil fuels, emissions that scientists say , are at the origin of global warming.
The 2016 initiative, Initiative 732, would have imposed a carbon tax on fossil fuels and would have reduced other taxes in order to generate neutral revenues.
A recent UN report called carbon pricing an essential policy to reduce the demand for fossil fuels and reduce greenhouse gas emissions.
Some oil companies, including Royal Dutch Shell, which operates the second largest refinery in the country, have adopted the concept. Although Shell chief executive Ben Van Beurden said he did not support this initiative because of "considerable flaws", the company's general support for carbon pricing influenced a decision made earlier this year to withdraw from the opposition campaign.
BP, which operates the largest refinery in the country, has also announced its support for carbon pricing. BP officials, however, criticized Washington's proposed carbon tax structure, which exempts some of the other major industrial polluters and disrupts Washington's economy without causing significant reductions in emissions.
"We say that is imperfect," said a BP spokesman during a previous interview. "If we're going to do that, we have to do it right."
The BP Cherry Point Refinery in Whatcom County currently pays approximately $ 77 million in local and annual taxes and royalties in Washington State (excluding the fuel tax collected on the sale of the gasoline and diesel). According to a spokesman for the company, this tax bill far exceeds all other BP refineries in the United States.
If the voting measure is accepted, Cherry Point's BP greenhouse gas royalties in 2020 would amount to an additional $ 36 million, which would increase the annual amount of taxes and royalties by more than 45%. the refinery in the state. This could be a significant incentive to try to reduce the refinery's greenhouse gas emissions. If emissions remained at 2016 levels, the total payment BP would pay to the government for refining activities would likely more than double.
Opponents of the initiative say that these costs will ultimately be borne by motorists.
"The costs will be borne by the consumer in the form of higher prices," said Dana Bieber, spokeswoman for the opposition campaign.
Eric de Place, a researcher at the Sightline Institute, a Seattle-based environmental research group, said oil companies may have trouble fully passing on carbon rights to refineries.
"It's going to increase the operating costs – but will consumers eventually eat it all?" The short answer is that I do not think it's likely, "de Place said.
Although they can not afford the costs, some believe that the carbon tax would not be an unreasonable financial burden for refineries, which have benefited from the corporate tax reductions contained in the legislation signed by the government. President Donald Trump last year.
Among them, Senator Reuven Carlyle, a member of D-Seattle, a supporter of Initiative 1631. Earlier this year, Carlyle asked a non-partisan member of the State Senate Ways and Means Committee to analyze the excise taxes paid by the five refineries. This review, based on information from the state's Ministry of Revenue, revealed that these refiners had paid about $ 200 million in fiscal 2017, for gross revenues of more than $ 17 billion. dollars.
At Carlyle's request, the committee member also roughly estimated the impact that the reduction in federal corporate tax rates could have on the net results of refiners in the state of Washington. This review indicated that the federal tax bill on their operations in Washington would be reduced by more than $ 200 million.
Earlier this year, Carlyle provided a copy of this analysis to BP representatives. In a July 30 response, BP challenged the Senate Committee's examinations.
Craig Boals, Deputy Director of Tax at BP, wrote: "We do not believe that such an analysis accurately reflects the taxable income generated by BP's operations in Washington or more broadly reflects BP's tax position. "
Carlyle is standing on the Senate committee exams.
"There is not an ounce of evidence to suggest that they are an overtaxed industry," Carlyle said.
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