Climatewire: Exxon and a Carbon Tax

By Benjamin Hulac

Exxon Mobil Corp. commands attention and gets it.

So energy and climate experts naturally took notice last week when CEO Darren Woods said charging a fee on greenhouse gases across the United States is a good idea.

"A uniform price of carbon applied consistently across the economy is a sensible approach to emissions reduction," Woods said in a statement (Climatewire, Feb. 24).

To old hands in the carbon tax world, it was a well-worn message.

Experts on energy, climate and finance say Exxon charts its policy positions with great care and appears serious about a carbon tax. Many are cautiously hopeful Exxon will put its industry muscle behind efforts in Congress to price greenhouse gas emissions. But others remain deeply skeptical the company will pursue a carbon tax in earnest. Some dismiss Woods' comments as lip service. And several carbon tax advocacy groups said they haven't been in contact with the company to discuss the issue.

"It's a small step ahead of where they were," said David Bookbinder, chief counsel at the Niskanen Center, a libertarian advocacy group that supports a carbon tax. "If you think the oil companies are going to be clamoring for one ... no."

Under the leadership of Secretary of State Rex Tillerson, who was CEO of Exxon from 2006 until December, the company said it backed a nationwide carbon tax, though its lobbyists opposed emission taxes at the state level (Climatewire, Jan. 27).

"For a decade or more they would say, 'We don't think you should do anything, but if you do something, make it a carbon tax,'" Bookbinder said.

"We've gone from 'don't do anything' to an implicit endorsement of a carbon tax, but you're not going to get anything further out of Exxon," he added. "They're not going to work for one."

Asked if Exxon would lobby Congress for a carbon tax and pursue other steps to price emissions, a spokesman said he didn't have any information about specific plans.

Catrina Rorke, energy policy director at the libertarian R Street Institute, said last week's announcement wasn't a new stance from the company.

"I believe they're serious about it," Rorke said in an interview.

Still, she said, a carbon tax isn't a top priority for the influential oil giant.

"This is always going to happen on a Hail Mary pass if it's going to happen," Rorke said of Congress passing a carbon tax into law. "It's possible, but highly improbable."

Edward Mason, head of responsible investment for the Church of England, told a conference of sustainable investors Monday that Exxon's tone has shifted.

"They're being more apparent," said Mason, whose organization has filed shareholders resolutions on climate change with Exxon for several years.

The firm's support for a carbon tax, he said, is no longer "something they refer to defensively on the website."

"Things are moving, but slowly," he added. "It's early days."

George Frampton and former Rep. Walter Minnick (D-Idaho), founders of the Partnership for Responsible Growth, which also would like to see emissions taxed, want things to move faster.

They said the company wields significant political clout and could be highly influential in lobbying for a carbon tax, adding that Exxon officials likely put a lot of thought into Woods' statement.

"They approach these issues with deliberation," Minnick said. "That's the opposite of the president tweeting."

And Frampton, who chaired the White House Council on Environmental Quality at the end of Bill Clinton's presidency, said by email that he was pleased by Exxon's statement.

"Hope it reflects an increasing willingness on their part to engage in this important debate," he said. "The critical question now is not so much what they say but whether they are prepared to act on it."

Representatives of the Niskanen Center, R Street and the Partnership for Responsible Growth said they haven't communicated with Exxon about pricing carbon in the last week.

If a carbon tax becomes part of a broader tax reform deal in Congress, it could raise trillions of dollars in revenue.

Taxing greenhouse gases at a rate of $25 per metric ton nationwide would cut emissions by about 10 percent and raise more than $1 trillion over a decade, according to a 2013 estimate by the nonpartisan Congressional Budget Office.

That money could then be paid back as dividends to the pubic — an idea the Climate Leadership Council has raised, too. There are other notions about how to use the revenue, like lowering the corporate tax rate, and it stands to be a point of conflict should the policy advance.

Ted Halstead, founder and CEO of the council, which issued a tax-and-dividend plan that would charge $40 per ton of released emissions, said pricing carbon would eliminate the tumult surrounding climate policy as Republicans and Democrats switch in and out of the White House.

Halstead said the whipsaw pattern of Democrats addressing climate change with regulations, then Republicans rolling those policies back when they gain power, is a frustrating way to slash emissions.

"The next election could just move it all back in the opposite direction," he said.

A handful of Republican statesmen and influential leaders make up the council (Climatewire, Feb. 8). That was intentional.

"We believe that the road to a climate breakthrough is through the Republican Party," he said.

Yet a carbon tax in a Republican-held Congress seems far-fetched.

In his speech to a joint session of Congress on Tuesday, President Trump did not mention climate change and during the election said he opposed the notion of a carbon tax.