By Andrew Restuccia & Elana Schor
Facing the increasing likelihood of a Hillary Clinton presidency, growing attacks from liberals and its own divides over a potential carbon tax, the oil industry is rethinking its political strategy on climate change.
The American Petroleum Institute is making quiet efforts to revamp its climate messaging, creating a task force that could revisit the industry’s long-held opposition to taxing greenhouse gas emissions. Many in the politically powerful industry believe that such a levy could be on the table if Clinton wins in November, especially if Democrats retake the Senate. The Democratic party's Sunday endorsement of a carbon price in its platform promises to fuel that speculation further.
The API task force — which POLITICO first reported last month — comes as the industry faces a fierce campaign by climate activist groups who want federal regulators to block additional drilling and keep fossil fuels in the ground. That includes an escalating effort to target ExxonMobil, the nation's biggest oil company, which faces investigations by attorneys general in three states and the U.S. Virgin Islands over its public statements on climate change.
Also weighing on Big Oil is a two-year collapse in global prices, the Obama administration’s environmental regulations and the international climate agreement that the U.S. negotiated last year in Paris — further signs of how much political ground has shifted under the industry’s feet since the days of "drill, baby, drill" less than a decade ago.
"The political environment has shifted so dramatically with Paris, with the 'keep it in the ground' campaign having controlled the conversation, with a president making climate change policy part of his legacy," one oil industry official said. "So it makes sense for API to be reviewing its approach to climate."
Clinton has promised to build on President Barack Obama’s climate agenda, in contrast to Donald Trump’s pledges to repeal the administration’s climate regulations and repudiate the Paris deal. Over the weekend, Clinton's campaign reached a deal with Sanders backers and environmentalists to add language to the Democratic platform calling for establishing a price on carbon, although the word "tax" was conspicuously left out.
Clinton energy adviser Trevor Houser distanced the Democratic nominee-in-waiting from the platform's carbon-pricing language, however, telling the Associated Press that taxing carbon is "not her plan."
The petroleum group is kicking off its review by convening a task force to consider updating its message on climate change, which four industry sources say is expected to take a broad look at the debate. Its creation stemmed from discussions among API’s executive committee members at a meeting last month, according to one source.
"We’re at the point in the election cycle where people are speaking in very broad strokes here," said Bruce Thompson, president of another industry group called the American Exploration & Production Council, who was not a party to the task force's creation. "Before we’re for or against or anything like that, we’d want to know what we’re talking about."
Thompson declined to take a firm position on a carbon tax before any concrete proposals emerge.
The industry’s harshest critics are unconvinced that oil companies will embrace a change of heart. "Considering that they've so far taken out one ice cap and much of the world's coral, I guess a task force would be in order," said climate activist Bill McKibben, who led the successful campaign to kill the Keystone XL oil pipeline and served as one of Sanders' representatives on the Democratic National Committee's platform-writing panel.
Tiernan Sittenfeld, senior vice president at the League of Conservation Voters, called the action "more evidence that the politics of climate change have shifted and that proponents of addressing climate change are clearly winning." But she said the industry needs to do more than talk about climate change.
"It remains to be seen if this task force prompts badly needed changes in how API spends money on lobbying and elections," she said.
API spokesman Eric Wohlschlegel declined to confirm the plans for the task force. "We assess all of our priority issues on a regular basis," he said in an email.
Some in the industry see the task force as the brainchild of Exxon, a powerful API member that is fighting allegations from climate activists that it misled the public and its investors about decades of internal research that documented the threat of climate change. An Exxon spokesman did not respond to a request for comment for this story.
Exxon is also an outlier among U.S.-based oil companies in supporting at least the concept of taxing fossil fuels’ carbon emissions in return for easing other regulations on the industry. European-based oil majors BP and Shell also back a carbon tax as preferable to the litany of new rules Obama has slapped on drillers and refiners. But Chevron and the politically active Koch Industries vehemently oppose the idea.
Sen. Chuck Schumer (D-N.Y.), the Senate Democratic leader-in-waiting, has said his party could pursue a carbon tax if Clinton wins the White House. But Clinton hasn’t publicly embraced the suggestion, and her appointees to the DNC platform committee voted down an earlier, more direct carbon tax proposal by Sanders backers.
One source told POLITICO the task force is an attempt to preempt further discord within the industry over the best approach to addressing global warming — and to avoid a repeat of public split that erupted a year ago when API pushed to end to the prohibition on U.S. crude oil exports. Congress ultimately lifted that 40-year-old ban, but not before oil producers who wanted to sell their oil abroad butted heads with small oil refiners who feared that exports would increase their prices.
According to a third industry source, the task force will give companies an opportunity to develop a unified defense against the legal attacks on Exxon. While a carbon tax is likely to play into the discussions, this source said he doubted that the divided membership would come to a consensus on the issue. Other industry officials similarly doubted that the task force will yield a dramatic shift in the industry's approach to climate change.
House Republicans have attempted to head off the carbon tax discussion before it begins. Last month, the House approved a non-binding resolution, largely along party lines, underscoring its opposition to the policy. Exxon took no position on that vote.
If the industry ever supports a carbon tax, it would probably be predicated on the elimination of a series of climate change-related regulations from the Environmental Protection Agency or the Interior Department. Exactly which regulations to target — and whether Democrats can be persuaded to eliminate them — would be one likely topic for the task force.
The split among API’s members over how and whether to tackle climate change opened in 2009, when Exxon CEO Rex Tillerson first endorsed a carbon tax as “a more transparent and a more effective” means to cut greenhouse gases than the cap-and-trade bill that Obama supported. But that bill died, and Obama spent the bulk of his first term pursuing an "all-of-the-above" energy policy that included support for offshore drilling and much praise for the U.S. natural gas boom.
But Obama’s second-term hawkishness on climate change has deepened the oil industry's schism, particularly after six major European oil companies last year urged U.N. climate negotiators in Paris to push “governments across the world” for a price on carbon. Four of the six are members of API, through their U.S. subsidiaries.
API President Jack Gerard has acknowledged that the industry has conflicting opinions over how to talk about and make policy on climate, telling reporters last year that there are “different views within our industry as to how that should be addressed.” The group’s lack of a black-or-white position on a carbon tax is not without precedent. API also has stayed neutral on whether to increase the gasoline tax to pay for infrastructure projects, as Gerard told reporters last year.
Last month's symbolic House vote to condemn the idea of a carbon tax, however, pulled those tensions into the open.
API told Bloomberg that it would take no position on the House proposal, echoing Exxon's stance. The group told POLITICO that it's "had a long history opposing carbon taxes," declining to address whether its position had changed.
Exxon has repeatedly touted its support for a carbon tax in a bid to counter attacks from Democrats and environmentalists over allegations that it misled the public about its internal climate research. The company scored a victory last month when the Virgin Islands' top law enforcement official withdrew a broad subpoena against the oil giant, but state AGs continue to circle the company.
Activists said their campaign against the industry will continue regardless of any tweaks API may make to its messaging.
"Talk is cheap and it'll take a lot more action for this to look like anything other than a desperate charade," Sierra Club Executive Director Michael Brune said.