Carbon tax chances slim under Trump, though even Tillerson supports the idea

Source: By Bill Loveless USAToday • Posted: Wednesday, February 1, 2017

With the Trump Administration poised to reverse U.S. policies on climate change, the head of a major oil and natural gas company is calling again for governments around the world to put a price on carbon emissions once and for all.

BP CEO Bob Dudley reiterated his company’s longstanding position in releasing its annual report on global energy trends.

“In BP, we continue to believe that carbon pricing has an important part to play as it provides incentives for everyone — producers and consumers alike — to play their part,” Dudley said at a news conference in London last week.

The “BP Energy Outlook 2035” offers some good news regarding carbon emissions, projecting annual growth of 0.6% per year from 2015 to 2035, compared to 2.1% per year over the last two decades.

Give credit to gains in renewable energy, natural gas and energy efficiency for that improvement.

But the report goes on to say that even at that lower annual growth rate, total carbon emissions from energy use are likely to increase by 13% from 2015 to 2035, a stark contrast with the 30% reduction in emissions that the International Energy Agency suggests is necessary to meet goals set in the 2015 Paris climate agreement.

“That,” according to Dudley, “flags up the need for further policy action.”

As a matter of policy, BP doesn’t express a preference between the two leading options for pricing emissions: a carbon tax, versions of which have been adopted in Australia, Ireland, Sweden and other countries, or a cap-and-trade program, which China says it will apply to electric power and other industries this year.

“Our view is that putting a price on carbon will reduce emissions at a larger scale and at a lower cost than alternative policy measures, by reducing the demand for carbon-intensive products,” BP says on its web site.

“We consider that this is fair — as long as the carbon price impacts all (greenhouse-gas) emitters equally — and we are keen to compete on this level playing field,” the company adds.

The message is a familiar one for BP and other major oil companies — among them ExxonMobil, Royal Dutch Shell and the Norwegian company Statoil — who favor carbon pricing as a means of addressing climate change.

ExxonMobil, the U.S.-based oil giant whose acknowledgement of climate change has been called late and lacking by some states and environmentalists, says a carbon tax is “the most efficient means of reflecting the cost of carbon in all economic decisions.”

In fact, former ExxonMobil CEO Rex Tillerson, President Trump’s choice for U.S. secretary of state, acknowledged at his recent Senate confirmation hearing that a carbon tax could replace “the hodgepodge of approaches” by federal and state governments to reduce emissions.

Tillerson’s remarks at the Jan. 11 hearing brought to mind a speech he gave in 2009, when he began to promote the idea of a “revenue-neutral” carbon tax, with the proceeds returned to taxpayers through reductions in other levies.

Such a fee, he told The Economic Club in Washington, “can be predictable, transparent, and comparatively simple to understand and implement.”

“As a businessman, I have to take a deep breath every time I speak about this, because it’s hard for me to speak favorably about any new tax,” Tillerson admitted. “I hope you see it shows how serious we are about this issue.”

But enacting a carbon price remains as unlikely as ever in Washington, where Trump is considering reversing the Obama administration’s commitment to the 2015 Paris climate agreement and most Republican lawmakers have signed a pledge to oppose tax increases.

That sentiment was evident last week at an American Enterprise Institute seminar examining the pros and cons of a carbon tax, where AEI and Heritage Foundation analysts disputed the widespread view of scientists that human-induced global warming puts the world at risk of an environmental catastrophe.

David Kreutzer, a senior research fellow in energy economics and climate change at the Heritage Foundation, an influential think tank for the Trump administration, called a carbon tax “a costly non-solution to an unlikely problem.”

Given the circumstances, Dudley’s advice on climate change, and Tillerson’s, for that matter, may well fall on deaf ears.

Bill Loveless @bill_loveless on Twitter  is a veteran energy journalist and podcast host in Washington.