ExxonMobil is talking up the idea of a revenue-neutral carbon tax to members of Congress. Revenue-neutral means any tax on carbon emissions would be offset by a corresponding decrease in other taxes. Why has ExxonMobil seen the light?
First, many question the company’s sincerity. A carbon tax would make coal more expensive, a result that would work to the energy giant’s advantage. It is the largest producer of natural gas in the US. Higher coal prices would make natural gas more attractive to energy consumers. Second, the company is pushing back hard against investigators seeking to determine if ExxonMobil knew about the dangers of climate change from burning fossil fuels decades ago and conspired to keep that information from the public.
It has actually sued the attorney general of Massachusetts, Maura Healey, in an effort to force her office to shut down its investigation. It claims Healey’s efforts violate its right to free speech. Presumably, its argument is that corporations are protected by the First Amendment if they choose to lie or commit fraud. We will have to wait how this bizarre legal claim plays out in the courts, but we can thank the justices of the Supreme Court for declaring that corporations are “persons” as defined by the Constitution.
ExxonMobil’s position is at odds with the prevailing mood in a Republican-controlled Congress, which is bitterly opposed to taking any action that might affect the flow of campaign contributions to its members. If millions of Americans have to suffer illness and premature death to satisfy the greed of the fossil fuel industry, that is perfectly fine with the likes of Mitch McConnell and James Inhofe.
But the fossil fuel industry is reading the tea leaves and seeing a possible shift in the political landscape come November. If the Democrats are able to wrest control of Congress back from Republicans and another Democratic president is elected, things could become uncomfortable for the industry.
It has to contend with pressure brought to bear by the COP21 climate change agreements entered into by all the nations of the world last December in Paris. It also has to contend with the divestment movement that calls upon major investors and pension fund managers to sell their holdings in fossil fuel companies. ExxonMobil may simply be positioning itself for what it perceives as a “worst-case” scenario.
For the past six months, Exxon has been asserting its position more in meetings within trade associations, including the American Petroleum Institute and American Fuel and Petrochemical Manufacturers, according to multiple reports from people who have attended meetings with Exxon officials. “Of the policy options being considered by governments, we believe a revenue-neutral carbon tax is the best,” Suzanne McCarron, the company’s vice president of public and government affairs, wrote in May in the Dallas Morning News.
“Previously Exxon’s positioning on a carbon tax had been passive. ‘Hey, we’re not loving it, but we’re not going to get in the way of it’,” said Michael McKenna, president of the energy lobbying firm MWR Strategies. Its clients include oil and refining companies, but not Exxon. “In just the last six months, there’s been an uptick in how they are asserting themselves in meetings about how to address this issue.”
A carbon tax would put a price on each ton of carbon emitted. But the devil is in the details, as they say. Where in the production and consumption process the tax would be levied depends on individual proposals. What ExxonMobil has in mind is a system where no new money flows to the government. But that misses the point of a carbon fee.
Transitioning from a fossil fuel–based economy will require massive investments in new technology. Workers who used to work in fossil fuel industries will need to be retrained so they can find employment in the clean energy sector. Investment in the infrastructure to support clean energy will need to be made. The carbon tax should fund all those activities.
Some advocates of strong climate policy like Senator Sheldon Whitehouse are skeptical Exxon’s shift signals a deeper change. “We’ve seen so little movement out of any of their lobbying front groups.” He introduced a bill to enact a carbon tax last year but it has gone nowhere, thanks to hostile and extreme GOP Senate leadership. His staff recently met with Exxon lobbyists, but the senator said, “The meeting was more just an exploratory feeler to see about further conversations.”
Perhaps ExxonMobil is feeling around, trying to decide what the best way is for it to deal with the gathering storm. Most other US energy companies are drawing a line in the sand and refusing to consider adapting their positions to help the earth survive. If the fossil fuel industry is the highest expression of the wonders of capitalism, then we need to find a new system. A properly configured carbon fee would help offset the worst ravages of a system that always puts profits ahead of people.