How the Oil Lobby Learned to Love Carbon Taxes

March 04, 2021

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by Jennifer A Dlouhy and Leslie Kaufman (Bloomberg) The American Petroleum Institute may come out in favor of a carbon price, a sign of Washington’s dramatic move toward climate-friendly policy.

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But the policy itself has a number of silver linings for polluters. For starters, unlike regulations restricting drilling or mandating clean energy, a carbon tax wouldn’t bar companies from extracting natural gas or force the fossil fuel out of the nation’s electricity mix. It could also drive investments in direct-air carbon capture and other technologies that would prolong the use of fossil fuels as a power source.

In the short run, putting a price on greenhouse gas emissions could give natural gas an even greater edge over dirtier-burning coal.

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“All of the oil majors have natural gas assets they are trying to protect, and this is a way to do that,” said Mike McKenna, a former deputy director of the White House Office of Legislative Affairs. “Once they became natural gas companies and started competing in the electricity space, it was just a matter of time till they wanted to rub coal out.”

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It’s also a favored tool of the business community. Scores of companies, including solar developers and operators of nuclear power plants, have backed a plan to tax carbon dioxide and distribute revenue to consumers, including giants such as Exelon Corp. and First Solar Inc. The Chamber of Commerce and Business Roundtable have made their own pivots on the issue, attracted by the promise of a consistent policy that wouldn’t shift with each election cycle.

But many environmentalists are deeply skeptical of working with the fossil fuel industry on anything. They suspect there are catches to oil companies’ support—including, for example, demands that a carbon tax be paired with environmental deregulation.

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The carbon tax-and-dividend plan that has emerged as businesses’ favored model in Washington, for example, would also preempt regulations governing carbon dioxide emissions from power plants and other industrial facilities.

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The shift in attitude among oil and gas companies came as majors in the industry began making investments in electric vehicles, natural gas, and renewable energy, which stand to benefit from a carbon price. Exxon Mobil Corp. endorsed a revenue-neutral carbon tax in 2009, and has already devoted lobbying dollars to the current push for legislation; so have ConocoPhillips, BP Plc and Royal Dutch Shell Plc. The policy could even give them a competitive advantage against smaller, independent oil producers and refiners—many of which are also API members—whose sole products are emissions-intensive fossil fuels, a situation that could cause tension in the ranks.

Supporting a carbon price would also give API and its members political cover from increasingly aggressive shareholders determined to ensure that oil companies’ ambitious carbon-cutting plans aren’t contradicted by their lobbying efforts.

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Even some lawmakers from coal-rich states, such as Democratic Senator Joe Manchin of West Virginia, have kept the door open to a carbon tax that could dole money to mining towns planning a new future beyond fossil fuels.

API leaders and members are discussing a possible statement endorsing an economy-wide price on carbon this week, with a formal vote by the group potentially late this month. READ MORE

“Disappearing” Carbon Tax for Non-Renewable Fuels (Advanced Biofuels USA)

Related articles: Carbon Tax Meets New Washington Politics

Oil Refiner Valero to Disclose Climate Lobbying After Criticism (Bloomberg)

'Put a big fat price on carbon': OECD chief bows out with climate rally cry (The Guardian)

ConservAmerica Statement On Carbon Pricing As Market-Based Approach To Tackling Climate Change (ConservAmerica)

API FACES BLOWBACK: (Politico's Morning Energy)

WHERE’S THE CARBON PRICING? (Politico's Morning Energy)

COMPANIES STUMP FOR CARBON DIVIDENDS: (Politico's Morning Energy)

Meanwhile, though...(Politico's Morning Energy)

EXXON EXPELLED: (Politico's Morning Energy)

Excerpt from Politico's Morning Energy: API FACES BLOWBACK:After hinting at the move a few weeks back, the American Petroleum Institute announced it supported putting a price on carbon emissions now — prompting rebukes all around. Republicans accused the group of kowtowing to the greens, and environmentalists said the group’s new stance lacked any real teeth.

Rep. Garret Graves (R-La.), top Republican on the House Climate Crisis Committee, said it was "a cop-out approach to appease the radical left." Sen. John Barrasso, ranking member on the Energy committee, also fired a broadside: “Spiking Americans’ energy costs while our economy recovers from a global pandemic is a disastrous idea.” And the group didn't get any support from climate activist group 350.org’s policy director, Natalie Mebane, who called the move too little, too late. “Now at the 11th hour, while our communities reel from climate impact after climate impact, [API is] endorsing a false solution,” she said.

The association managed to draw the ire of legislators and stakeholders alike despite the fact that it was vague about what kind of carbon policies it wanted. API President Mike Sommers told reporters Thursday: “What we’re advocating is not a specific carbon pricing policy. We’re advocating a market approach.” Ben Lefebvre and Lorraine Woellert have more on the announcement.

API dismissed a lot of the criticism, saying in a statement that “The size of the climate challenge is large enough for lots of different approaches.” The announcement comes as the industry finds its footing with an administration determined to reach net-zero emissions economy-wide by 2050. Ben and Anthony Adragna have more on the backlash for Pros. READ MORE

Excerpt from Politico's Morning Energy: WHERE’S THE CARBON PRICING? Biden’s infrastructure plan would create an “Energy Efficiency and Clean Electricity Standard” but noticeably absent is any mention of carbon pricing. That caught the attention of a group of Democratic lawmakers pushing carbon fee and dividend legislation, which they say is a must amid Congress’ infrastructure negotiations.

“I think this works well with the president's plans,” said Rep. Ted Deutch (Fla.), the lead sponsor, during a virtual news conference Tuesday. Rep. Scott Peters (Calif.) added that he raised the measure’s absence from Biden’s plan with senior administration officials (he didn’t say who) but also acknowledged the White House has to be cautious in the early stages of rolling out its proposal.

Deutch said the lawmakers were reaching out to Republicans, who have shown some support for previous iterations of their bill. Anthony Adragna has more for Pros. READ MORE

Excerpt from Politico's Morning Energy: COMPANIES STUMP FOR CARBON DIVIDENDS:The Climate Leadership Council is organizing a series of meetings this week for corporate leaders to advocate carbon dividends directly to lawmakers. More than a dozen Democratic and Republican senators will meet with business leaders from companies including Exxon Mobil, GM, IBM, Procter & Gamble and several others to discuss the measure.

“No other climate policy will go further in lowering emissions, stimulating innovation across the economy, boosting American competitiveness and supporting families than carbon dividends,” said Greg Bertelsen, the council’s CEO, in a release.

The meetings come as the private sector urges lawmakers to pursue climate-protecting measures. As ME flagged Wednesday, hundreds of companies wrote to Biden to reduce greenhouse gas emissions to at least 50 percent below 2005 levels by 2030. READ MORE

Excerpt from Politico's Morning Energy: Meanwhile, though, despite the business community’s more vocal embrace of carbon pricing, Republican Whip Steve Scalise (R-La.) and Rep. David McKinley (R-W.Va.) offered a resolution on Tuesday opposing a carbon price. Read the resolution, which has passed under Republican control previously, here. READ MORE

Excerpt from Politico's Morning Energy: EXXON EXPELLED: The Climate Leadership Council kicked out Exxon Mobil over the Keith McCoy scandal, where a company lobbyist was caught saying the oil major viewed pricing carbon as nothing but a PR mechanism. Exxon was a founding member of CLC, which worked toward a pro-market, centrist position on climate change, including advocating for a carbon tax.

“CLC’s decision is disappointing and counterproductive,” Exxon spokesperson Casey Norton said in a prepared statement. “It will in no way deter our efforts to advance carbon pricing that we believe is a critical policy requirement to tackle climate change.” Ben Lefebvre has more for Pros. READ MORE