Obama to call for climate bill and special BP spill fund

15 June 2010 19:29  [Source: ICIS news]

WASHINGTON (ICIS news)--President Barack Obama on Tuesday is expected to call on BP to establish a special relief fund for coastal communities hurt by the Gulf of Mexico spill, and he will urge US voters to press their representatives in Congress for tough climate legislation.

Sources said that in his first televised speech from the Oval Office, Obama would demand that BP establish a $20bn (€16.4bn) fund to cover ongoing income losses incurred by fishing and tourism industries along the coast as a result of the still developing BP oil spill in the Gulf of Mexico.

The president also might call on BP to suspend or delay its next two or three quarterly dividend payments to its shareholders and cutback on its public relations spending, all in order to ensure that the giant energy company has sufficient cash resources to cover spill-related damage in coastal communities.

It was expected that Obama would insist that the $20bn escrow fund be managed by an as yet unidentified third party that could write checks and otherwise distribute BP’s cash without the company’s specific authorization.

The $20bn escrow fund would be in addition to other billions of dollars that BP may be facing in remediation and clean-up costs and inevitable fines by the Environmental Protection Agency (EPA).

One of the issues that might be addressed by the president is whether BP should be held liable for the loss of income among offshore energy workers that have been idled by the president’s six-month moratorium on deepwater drilling in the Gulf.

That Obama was making his first televised speech from the Oval Office, the president’s personal office in the White House, was meant to give extra weight to the issue.  Traditionally, US presidents have reserved such Oval Office addresses for the most serious, crisis-level occasions.

The president has come under criticism from members of both major US parties for not acting soon enough or with sufficient command force in dealing with the Gulf spill.  The Oval Office presentation likely was meant to help dispel some of that criticism.

In addition to putting more heat and financial liability on BP, the president was expected to use the speech to press for climate change legislation that has been stalled in Congress since late last year.

He was likely to call for legislation that would “put a price on carbon” by making it costly for US electric utilities and other industries to use such carbon-rich fuels as coal, oil and natural gas for energy generation.

Legislation narrowly approved by the House last year would impose a major cap-and-trade emissions mandate on the US, requiring utilities and other industries to purchase tonnage permits to cover the greenhouse gases (GHG) they emit.  Under that legislation, the amount of emissions permits allowed each year would be gradually reduced.

A similar bill in the Senate is stalled because both Republican and Democrat senators are concerned that such a cap-and-trade mandate would trigger sharp increases in energy costs for US businesses and consumers.

Obama and other advocates of a cap-and-trade or some other form of imposing a cost on carbon emissions concede that those plans would raise US energy costs significantly.

The president was expected to use his Oval Office speech to argue that increasing the price of carbon-based energy is necessary to ward off global warming, citing the BP Gulf spill as an example of the costs associated with hydrocarbon energy sources.

The speech was scheduled to be broadcast at 2000 hours Eastern Time on Tuesday (0100 hours GMT Wednesday).

($1 = €0.82)

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