ExxonMobil and the carbon tax - Energy Factor
Perspectives blog

ExxonMobil and the carbon tax

Ken Cohen - 12/02/2015
Earlier today I provided our position on the COP21 climate conference and briefly covered our long-standing support for a revenue-neutral carbon tax.

I thought I would take the opportunity here to reiterate the rationale for our position, as well as to underscore the ways in which we have advocated for it.

As I have mentioned on a number of occasions in this space, we believe the risks of climate change are real and those risks warrant constructive action by both policymakers and the business community.

For our part, we are taking actions to reduce greenhouse gas emissions in our own operations, as well as providing products and supporting initiatives to promote more efficient use of energy by consumers. Meanwhile we are increasing investments in production of lower-carbon natural gas while also sponsoring research into next-generation energy technologies to lower emissions.

Sound principles

When it comes to policies for putting a price on greenhouse gas emissions, we believe their effectiveness will be determined by how closely they hew to certain core principles. Among these are uniformity of application; global participation; reliance on markets to drive the selection of solutions; minimal regulatory complexity and maximum transparency; and the flexibility to make future adjustments.

In our view, a revenue-neutral carbon tax best fulfills those principles.

As ExxonMobil CEO Rex Tillerson said in a speech before the Woodrow Wilson International Center for Scholars in Washington in January 2009:

A carbon tax is also the most efficient means of reflecting the cost of carbon in all economic decisions — from investments made by companies to fuel their requirements to the product choices made by consumers. A carbon tax may be better suited for setting a uniform standard to hold all nations accountable. This last point is important. Given the global nature of the challenge, and the fact that the economic growth in developing economies will account for a significant portion of future greenhouse-gas emission increases, policy options must encourage and support global engagement.

Since then, he has repeated that message in many other high-level forums, including our annual shareholders meeting and in television interviews, like in this 2013 interview with Charlie Rose. Moreover, he has mentioned the topic in his private meetings with high-ranking political leaders of both parties.

Engaging the public

ExxonMobil executives have echoed that message in countless private briefings with members of congress on carbon tax policy options. We have also repeated our support for this policy option in numerous meetings with socially responsible investors and outside experts.

Our support for a carbon tax meeting the criteria I noted above is featured and explained on our corporate website.

We have also made clear our position each year since 2009 in our Corporate Citizenship Report and in media briefings launching our Outlook for Energy: A View to 2040.

This year alone we have delivered more than 300 of these Outlook presentations to a wide variety of parties engaged in the public discussion about energy, the environment, and climate.

These meetings have taken place all over the world and have included government officials (e.g. European Union, U.S. Department of Energy, members of congress), representatives from religious and faith-based institutions (e.g. Presbyterian Church USA, United Church of Christ, the Vatican), and officials from non-governmental and academic organizations (e.g. World Bank, Bipartisan Policy Center, and numerous universities).

Business planning and a price on carbon

One key point we make in many of these briefings is that ExxonMobil has included a proxy price on carbon in our business planning since 2007.

This enables us to analyze the impact of a price on carbon on various investment opportunities. This proxy cost, which in some regions may approach $80 per ton, seeks to reflect all types of actions and policies that governments may take.

Our position advocating a revenue-neutral carbon tax is well known. Indeed, the editorial board of the New York Times – not our biggest fans, to say the least – prominently noted our advocacy earlier this year.

One final thought about the controversy over the last two months that has stemmed from a deliberate blurring of the distinction between our long-standing support of climate science and our participation in the policy arena: What our critics call climate denial is really a difference of opinion on policy options.

What people should know is that the scientific study of climate change risks that ExxonMobil has undertaken for nearly 40 years underpins the policy positions we take – whether it is opposing the Kyoto Protocol or favoring a revenue-neutral carbon tax.

We will continue to work to advance the science, to fill in the gaps of what is currently unknown or unclear. And we will continue to pursue effective and efficient policy options using the established scientific knowledge as the foundation for the things we advocate.

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