Governors' Wind Energy Coalition

The American Petroleum Institute is discussing internally whether to lobby for a specific carbon tax mechanism, the trade association confirmed to ME. The group’s climate committee approved calling for a tax falling between $35 to $50 a ton of carbon, though there are still negotiations in store on exact details of how it all would work before the API executive committee takes up the suggestion, an API representative told ME after the Wall Street Journal first broke the news.

Though nothing is final yet, the group feels that an easy-to-digest publicly known carbon price would serve the industry better than a price set by Interior and other government agencies that could fluctuate with every new administration, the person said. “The idea that consumers aren’t already paying for climate policy is a false status quo,” the representative said. “They are already paying through regulation and hidden taxation.”

The oil and gas industry’s lobby group, much like Biden, is caught between conservatives and progressives when it comes to energy policy. When API came out in support for a general price on carbon in 2021, Republicans lambasted the policy shift, and Louisiana’s Rep. Garret Graves , the top Republican on the House climate committee, called news of API’s fleshing out of the idea “ just idiotic.” Progressives have also walked back earlier enthusiasm for a carbon tax, saying it would fall too hard on low-income people who will spend a greater part of their paycheck on fuel.

It’s a similar story within the industry, with tension between international oil companies who need to adapt to meet changing regulations and investor expectations on climate policy and the more conservative firms that are loath to advocate a new tax. On the one side are European companies like Shell, BP and Equinor that have branded themselves as being aggressive on climate measures (France’s Total Energies publicly exited the association last year partly because of “differing positions” on carbon prices). But API membership also includes companies, mainly U.S.-based, that could threaten to take their membership fees elsewhere if it advocates too hard for a tax, leaving it in a bind. That could also put it on the outs with its traditional Republican backers in the federal government.

The API “is afraid of losing member companies and is straddling the fence with its US-based companies and the European players, with splits among the former giving them further headaches,” said one industry source who requested anonymity to discuss internal association politics.