Exxon switches to back a carbon tax
Summary: Exxon Mobil Corp, once a powerful sceptic of global warming, will now be among the first oil companies to put money into the fight to make climate change a political priority in Washington.....
The US’s largest energy producer will commit $US1 million over two years to promote a national tax on carbon as a way to address the environmental issue. The funding will back an initiative designed to appeal to the Republicans who now control Washington, and may open the door for Exxon’s peers in the oil industry to follow.
As warnings over the dangers of climate change have grown, governments around the world have pursued increasingly stringent regulation of fossil-fuel companies.
Exxon’s move is an attempt to manage such pressure in the US in ways it hopes will simplify requirements on the oil industry, according to a person familiar with the company’s thinking.
Exxon sees a carbon tax as an alternative to patchwork regulations, putting one cost on all carbon emitters nationwide and eliminating regulatory uncertainty hovering over Exxon’s business in states that might seek to target oil companies, the person said.
Exxon’s contribution will go to Americans for Carbon Dividends, a new group, one of whose co-chairmen is former Senate Majority Leader Trent Lott. It is promoting a carbon tax-plus-dividend policy first proposed by two former US secretaries of state, James Baker III and George Shultz, last year. All three men are Republicans.
The initiative’s goal is to discourage companies from emitting carbon through the tax, while minimising additional cost to consumers.
Funds raised by the tax would be channelled to Americans through what the group calls a “carbon dividend” that it estimates could be as much as $US2000 annually per family. Monthly payments would go directly to the recipients. The tax would be “revenue-neutral,” having no net effect on government receipts.
Exxon’s move places it among global corporations that are promoting policies and business strategies to fight climate change. That list includes Apple, Nike and McDonald’s, all of which have pledged to embrace renewable power and eliminate greenhouse gas emissions.
General Motors, Johnson & Johnson, and other oil companies, including BP, are founding members of the Climate Leadership Council, the organisation finetuning the Baker-Shultz plan.
“This is a real turning point in US climate policy and politics,” the council’s leader, Ted Halstead, said of Exxon’s commitment. “Corporations are leading us to a solution.”
Exxon’s decision to lobby for a carbon tax represents a remarkable shift from the company’s stance roughly two decades ago. At the time, Exxon was at the centre of industry efforts questioning the validity of global-warming claims and policy proposals -- tactics that critics say contributed to the political polarisation that has impeded legislative consensus on the issue to this day.
As early as 1997, Exxon took out newspaper advertisements, titled “Unsettled Science,” that asserted “scientists remain unable to confirm” whether humans are causing “global warming.” That same year, in a speech just months before a multination agreement to reduce emissions was reached in Kyoto, Japan, Lee Raymond, then Exxon’s CEO, said proposals to cut emissions “are neither prudent nor practical.”
In the ensuing years, Exxon and a number of its peers spent tens of millions of dollars supporting such bodies as the Global Climate Coalition, the American Petroleum Institute and the American Legislative Exchange Council, all of which highlighted scientific uncertainty about rising global temperatures. As it did, Exxon also supported climate research, including a $US100 million contribution to Stanford University to promote climate science and emissions reduction.
By all accounts, the company’s stance softened after Rex Tillerson took over from Mr Raymond in 2006. Exxon executives began affirming climate change in public statements, saying the problem “warrants action.” The company also began supporting the idea of a “revenue-neutral carbon tax.”
That change coincided with investor pressure to disclose the impact of climate regulations on its business -- and accusations from environmental advocates that while Exxon recognised the dangers of rising temperatures, it ignored the issue or even sowed doubt on the science.
Exxon’s support for a carbon tax stems in part from a desire to alleviate some of these pressures. The proposal Exxon is promoting would include legal provisions to shield companies from liability for any connection between historical emissions and the effects of climate change, though not for fraud.