Exxon Mobil pledges $1 million to lobby for carbon tax
Exxon Mobil Corp, the largest oil group in the US, has pledged to donate $1 million to a carbon tax lobbying campaign. The move made Exxon the first American oil and gas producing company to financially back a revenue-neutral carbon tax.
The company will contribute $500,000 annually over the next two years to Americans for Carbon Dividends (AFCD) – a national education and advocacy campaign launched this summer by former Senators John Breaux and Trent Lott to promote the Baker-Shultz Carbon Dividends Plan. The plan proposes the implementation of a steadily increasing tax on carbon emissions starting at $40 a ton. The revenue generated by the government would be distributed to Americans in the forms of monthly dividend checks, direct deposits or contributions to individual retirement accounts. According to the AFCD, the solution would “[send] a powerful signal to businesses and consumers, while generating revenue to reward Americans for decreasing their collective carbon footprint”.
If implemented, the tax would greatly affect the oil, natural gas, and coal industries, raising the costs of energy produced from fossil fuels and motivating consumers to use alternative sources. For this reason, Exxon’s active support of the tax may seem strategically counterintuitive. Lawrence Summers, a Harvard University economics professor and former treasury secretary commented: “A company getting behind its product being taxed is a very rare thing”. Exxon, however, has publicly supported a carbon tax for nearly a decade since the company’s then chief-executive Rex Tillerson announced in his 2009 Washington speech that he supported a $20 per-ton carbon tax. Similar statements were made by other oil giants, such as Royal Dutch Shell, BP, and Total S.A.. However, before the Exxon announcement, companies had confined themselves to verbal support without any financial backing.
Exxon’s pledge came after this week’s alarming climate change report provided by the United Nations Intergovernmental Panel on Climate Change (IPCC), demanding an “unprecedented in scale” action by the global community to stay within the 1.5°C limit temperature increase. At the current level of emissions, the threshold is estimated to be crossed by 2040, leading to dire environmental consequences: 8% of plants that have been studied would lose half their climatically-suitable area, and as much as 80% of the coral reefs would disappear.
According to an assessment by Resources for the Future, a non-partisan think tank, the carbon tax would lead to a sufficient reduction in greenhouse gas emissions to satisfy the United State’s original commitment in the Paris climate accord. As president Trump withdrew from the agreement last year, the appeal of the carbon tax as an alternative way of reducing the carbon footprint significantly increased.
Oil and gas companies have another incentive to support a carbon tax: the implementation of a single nation-wide tax would relieve them from dealing with differing carbon regulations implemented in different states.
Whether ecologically or self-motivated, Exxon’s pledge attracted public attention to the problem of carbon emissions and has the potential to encourage other companies to follow their lead. Mark McKinnon, a senior adviser to Americans for Carbon Dividend, expressed confidence in the expected popularity of the carbon tax: “you’ll see a lot of other corporations who have been closely watching this process decide the time is right for them to lend their support, as well.”