Oil companies warm to law on emissions

Times Staff Writer

Oil companies on Thursday embraced Gov. Arnold Schwarzenegger’s new executive order to fight global warming by boosting the consumption of alternative fuels and cutting carbon emissions from car and truck exhausts by 10% over the next 13 years.

“To meet the demand for transportation fuel, we need everything we can think of,” said R.E. Zalesky, vice president for biofuels and hydrogen for Chevron Corp., California’s biggest petroleum refiner.

Zalesky and other business executives from electric utilities, alternative fuel developers and even a San Francisco taxi cooperative applauded Schwarzenegger as he signed an executive order to make California the first government in the world to set a comprehensive standard for regulating the amount of carbon dioxide in transportation fuels.

The order is a key component of last year’s global warming law, which seeks to reduce emissions of carbon and other greenhouse gases by 25% by 2020.


Environmental activists continue to strongly support the initiative. But the enthusiasm for the governor’s action by the oil industry is in sharp contrast to its groans about last year’s landmark legislation.

“My guess is they’re sick of being on the losing end in opposition to the governor and Legislature,” said Bill Magavern of the Sierra Club. “They want to get on board the bandwagon.”

Schwarzenegger unveiled his fuel standard proposal during last week’s annual State of the State speech. He said then and now that California must become a leader in combating global warming to fill a void created by the inaction of the administration of President Bush.

“We are not waiting for Washington,” he said in a ceremony on the steps of the state Capitol. “We are moving forward on our own because this is an issue that is too important.”


Schwarzenegger predicted that his initiative would put more than 7 million alternative or hybrid vehicles on California roads by 2020, reducing the demand for gasoline and diesel fuel by 3.2-billion gallons a year.

Oil companies, which opposed last year’s global warming law, now say they’re happy to be on the governor’s team.

They say they like Schwarzenegger’s market-friendly approach of allowing petroleum refiners and companies that develop clean alternative fuels to compete for the motoring public’s business. They also are enthusiastic at being able to buy and sell credits that would be earned by exceeding state requirements for reducing the carbon content of fuels.

Alternative fuels such as ethanol or hydrogen have a place alongside clean-burning gasoline and diesel fuels at service stations, said Chevron’s Zalesky. “We don’t see it as competing; it’s complementary,” he said.

Pete Montgomery, the chief California lobbyist for another oil giant, London-based BP, said he’s “cautiously optimistic” about the governor’s fuels order. “He’s not mandating that specific fuels be sold; he’s not picking and choosing winners and losers and he’s not deciding today what the answer is for 2020,” he said.

BP markets gasoline in California under the Arco brand.

Electricity generators, meanwhile, also said they’re eager to compete in the vehicle fueling business. “Southern California Edison sees electricity as one of the alternative fuels that will help achieve this standard,” said John Fielder, president of the Rosemead-based utility. Edison, a unit of Edison International, serves 13 million customers in Los Angeles and Orange counties, the Inland Empire, the Central Coast and San Joaquin Valley.

Fielder predicted that up to 60% of the planned carbon reduction could come from drivers switching in the near future to so-called plug-in hybrid cars that run on electric and gasoline motors and can be recharged from household AC outlets. “We have the infrastructure in place to deliver fuel to cars, without building a new power plant,” he said.