Now that Big Oil has come out in favor of a Republican plan to tax carbon, will the Trump administration and the US Congress follow suit? It’s unlikely at this early stage, although the backing of key oil companies certainly makes future discussions fertile ground.
Republican elders are stepping up and taking the lead on this issue and they have attracted the support from companies that make their living exploring for fossil fuels. The latest such effort is coming from the Climate Leadership Council, which has released a plan to begin taxing carbon at $40 per ton. “The Conservative Case for Carbon Dividends” lays out a scenario where that price would rise each year and where carbon emissions would fall.
The group, which includes former Secretary of State James Baker, former Secretary of State George Shultz and former secretary of the Treasury Henry Paulson, says that $194 billion in revenues would be generated in year one — a figure that it expects to increase to be $250 billion a decade later. That money would then be returned to the American people in the form of a “dividend,” although that plan would also winnow down certain carbon regulations. (Other versions would use the revenues to either reduce taxes or to invest them in new technologies.)
Exxon Mobil, BP, Royal Dutch Shell and Total S.A. publicly backed the plan on Tuesday, reports the New York Times. It says that the climate council’s plan is a market-driven approach that is better than the Obama administration’s top-down regulatory approach.
“The oil giants could simply pass the cost of new taxes on to customers,” the story says. “And to protect American companies, the plan would introduce so-called border adjustments, intended to increase the cost of goods coming from nations that do not have a similar carbon tax.”
At the same time, the Republican plan would limit lawsuits over greenhouse gas emissions, which is a fight that Exxon is now embroiled on the state level. A carbon tax is a more efficient way to limit heat-trapping emissions, the oil companies say.
“If a sufficiently high carbon tax were imposed, it could accomplish a lot more for fighting climate change than liability suits,” Michael B. Gerrard, the director of the Sabin Center for Climate Change Law at Columbia Law School told the New York Times.
To be sure, some environmental groups are skeptical of the oil companies: “Exxon is signing on to this carbon tax proposal because they know it’s dead on arrival” in Congress, said Jamie Henn, a co-founder of 350.org, in the New York Times story.
Hovering over the debate is the lack of support from Washington and the Trump administration’s withdrawal from the Paris Climate Accord. At issue now is whether Big Oil’s support of a carbon tax will force the Trump administration to re-evaluate its position.
At the same time, at least 365 brand name companies have supported efforts to keep global temperatures in check and include General Mills, DuPont Loreal, Nike, Hewlett Packard and Kellogg.
Here in this country, carbon emissions are generally falling. The EPA reports they dropped 2.2% between 2014 and 2015. More broadly, the nation’s greenhouse gas emissions are roughly 9% below 2005 levels.
Natural gas is doing most of the heavy lifting — replacing coal as the leading form of electricity generation. But pricing carbon has a role too.
Already, California and the Northeastern states have cap-and-trade systems. And Oregon wants to tie in with the one in California, which sets carbon limits and auctions credits to industry. Those companies that are able to exceed the expectations can either bank their allowances for future use or sell them to other businesses that are unable to meet their obligations. As the ceilings come down, overall emissions then fall.
Right now, the efforts to curb carbon are left largely to the cities and states as well as to those businesses that want to be seen as cutting-edge. It will be increasingly difficult for Washington to ignore those efforts, however, especially if Big Oil is stands firmly behind them.
The answer “ultimately means penalizing companies that emit too much pollution or putting a price on carbon,” says Christine Todd Whitman, former EPA administrator under President George W. Bush, in an interview with this writer. “The environmental cause is basically a Republican issue. We can do these things without cratering the economy.”
