Big Oil Backs Carbon Tax
Climate activists not impressed.
Executives from leading oil companies, including ExxonMobil, BP, Chevron, ConocoPhillips, and the American Petroleum Institute (API), met virtually with Biden administration officials to discuss policies aimed at addressing the problem of man-made climate change. The Wall Street Journal reported that company leaders said that "they wanted to work with the administration and pledged support for policies that would make it more expensive to emit the gases that contribute to climate change." In a statement issued after the virtual meeting, API CEO Mike Sommers declared, "We are committed to working with the White House to develop effective government policies that help meet the ambitions of the Paris Agreement and support a cleaner future." The API is rumored to be considering coming out in support of carbon emissions pricing.
ExxonMobil and ConocoPhillips previously endorsed the bipartisan Climate Leadership Council's (CLC) revenue neutral carbon tax and dividend proposal in which escalating taxes collected on oil and natural gas at the wellhead and on coal at the minehead would be entirely rebated in equal sums to each American as an annual payment. The CLC cites a 2018 study that finds that 70 percent of American households would receive more in dividend payments then they would pay in increased energy prices.
Once the CLC's carbon tax plan is adopted, all other regulations and subsidies aimed at reducing carbon dioxide emissions, such as automobile fuel efficiency and renewable portfolio standards, are supposed to be permanently repealed.
However, lots of climate activists oppose carbon taxes. Why? InsideClimateNews offered the example of Matto Mildenberger, a political scientist at the University of California, Santa Barbara, who has argued that carbon taxes make climate action unpopular because they front load the costs immediately onto consumers while the eventual benefits of lower temperatures, less fierce storms, and lower sea levels stretch into the future. As InsideClimateNews explained:
In the view of Mildenberger and others who've studied climate politics around the world, subsidies, regulation, and other policies that provide more immediate and visible benefits—like jobs creation—are a better way to jump-start climate policy, even if they cost more in the short run. That's because they stimulate investment to help lower the cost of alternative energy, and at the same time help broaden political support for stronger climate policy. New actors with real investments they want to protect and advance will want more aggressive action, and politicians will respond.
On the other hand, economists in general favor the idea of imposing a price on carbon emissions as an efficient way to steer economic activity toward energy efficiency and the development of cheaper no-carbon energy supplies. Carbon taxes, economists argue, should attract the support of free market conservatives. But in fact, during the procedural votes on Biden's COVID-19 relief plan, all of the Senate's 50 Republicans voted in favor of an amendment to prohibit the adoption of a federal carbon tax.
If oil company support for a carbon price is aimed at forestalling the rollout of big climate change regulations and expenditures, the effort has likely come too late. For example, the Biden administration's $3 trillion infrastructure plan is anticipated to include $400 billion to combat climate change, including $46 billion on climate-change R&D, $60 billion for green transit, and billions more on upgrades to the electrical grid, energy efficiency improvements to housing, and the construction of thousands of charging stations for electric vehicles across the country. In order to pay for at least part of this costly plan, the Biden administration might happily tax carbon while forgetting all about revenue neutrality.