Exxon Mobil’s New CEO: Bring on a Carbon Price
February 24, 2017
Below, Exxon’s new Chairman Darren Woods calls for a price on carbon.
Wood’s predecessor Rex Tillerson, well known to viewers of these vids, has gone on to fame, of course as Russian,.. ahem, I mean, US Secretary of State.
Above, and below, a good time for some reminders of what our expanding slate of options is, from Berkeley’s energy expert Dan Kammen.
We all generally share similar aspirations: jobs and good health, comfortable and safe places to live and a clean environment. That’s true in U.S. cities like Dallas – where ExxonMobil, the company I now have the privilege to lead, is headquartered – and it’s true all over the world. What’s also true, and too often overlooked, is the vital role that energy and energy technologies play in fulfilling these shared aspirations.
Energy is the power behind everything – from our smartphones to our global economy. Growing U.S. energy production has spurred a manufacturing renaissance, adding $20 billion a year to the economy and hundreds of thousands of new jobs, according to estimates by the U.S. Chamber of Commerce. ExxonMobil’s new projects on the U.S. Gulf Coast are expected to generate more than 45,000 jobs alone.
Most forecasts project that many factors – including global population growth of nearly 2 billion, a doubling of worldwide economic output and a rapid expansion of the middle class in emerging economies – will raise global energy demand by an amount equivalent to the total energy used today in the entire Western Hemisphere.
This growing demand creates a dual challenge: providing energy to meet people’s needs while managing the risks of climate change. I believe, and my company believes, that climate risks warrant action and it’s going to take all of us – business, governments and consumers – to make meaningful progress. At ExxonMobil, we’re encouraged that the pledges made at last year’s Paris Accord create an effective framework for all countries to address rising emissions; in fact, our company forecasts carbon reductions consistent with the results of the Paris accord commitments.
The world already has powerful tools for meeting global energy demand while reducing emissions. One is natural gas. Today in America, nearly one-third of the electricity is produced using natural gas. Our role as the country’s largest producer of natural gas – which emits up to 60 percent less CO2 than coal for power generation – has helped bring CO2 emissions in the United States to the lowest level since the 1990s. Increasing use of natural gas means our overall energy mix is growing less carbon-intensive.
Greater energy efficiency is also essential. It might seem counterintuitive, but a big part of ExxonMobil’s business is developing products and technologies that help save energy. Examples include our advanced automotive materials that make cars lighter and more fuel-efficient, and improved plastic packaging that reduces the energy needed to ship goods around the world.
But the world also will need breakthrough clean-energy technologies such as carbon capture and storage (CCS). ExxonMobil is investing heavily in CCS, including research in a novel technology that uses fuel cells that could make CCS more affordable and expand its use.
Let’s stop for just a moment here in the spirit of keeping it real. Exxon does have a history with climate science that makes their current stand, well, ironic to put it mildly.
Ok, Exxon, please continue.
We’re also researching advanced biofuels, including biofuels made from algae – a potentially game-changing energy source that would place less stress on food supplies, land and fresh water than traditional biofuels while reducing emissions. All told, we’ve invested $7 billion to develop lower-emission energy solutions during the past decade and a half.
Governments can help advance the search for energy technologies by funding basic research and by enacting forward-looking policies. A uniform price of carbon applied consistently across the economy is a sensible approach to emissions reduction. One option being discussed by policymakers is a national revenue-neutral carbon tax. This would promote greater energy efficiency and the use of today’s lower-carbon options, avoid further burdening the economy, and also provide incentives for markets to develop additional low-carbon energy solutions for the future.
Below, an all star panel of conservative Republican economics and policy experts recently advocated a carbon price in a New York Times Op-ed.
Martin S. Feldstein was the chairman of the Council of Economic Advisers under President Ronald Reagan and N. Gregory Mankiw was the chairman under President George W. Bush. Ted Halstead is the founder and chief executive of the Climate Leadership Council.
Our co-authors include James A. Baker III, Treasury secretary for President Ronald Reagan and secretary of state for President George H. W. Bush; Henry M. Paulson Jr., Treasury secretary for President George W. Bush; George P. Shultz, Treasury secretary for President Richard Nixon and secretary of state for Mr. Reagan; Thomas Stephenson, a partner at Sequoia Capital, a venture-capital firm; and Rob Walton, who recently completed 23 years as chairman of Walmart.
Our plan is built on four pillars.
First, the federal government would impose a gradually increasing tax on carbon dioxide emissions. It might begin at $40 per ton and increase steadily. This tax would send a powerful signal to businesses and consumers to reduce their carbon footprints.
Second, the proceeds would be returned to the American people on an equal basis via quarterly dividend checks. With a carbon tax of $40 per ton, a family of four would receive about $2,000 in the first year. As the tax rate rose over time to further reduce emissions, so would the dividend payments.
Third, American companies exporting to countries without comparable carbon pricing would receive rebates on the carbon taxes they’ve paid on those products, while imports from such countries would face fees on the carbon content of their products. This would protect American competitiveness and punish free-riding by other nations, encouraging them to adopt their own carbon pricing.
Finally, regulations made unnecessary by the carbon tax would be eliminated, including an outright repeal of the Clean Power Plan.
Our own analysis finds that a carbon dividends program starting at $40 per ton would achieve nearly twice the emissions reductions of all Obama-era climate regulations combined. Provided all four elements are put in force in unison, this plan could meet America’s commitment under the Paris climate agreement, all by itself. Democrats and environmentalists may bemoan the accompanying regulatory rollback. But they should pause to consider the environmental value proposition.
These four pillars, combined, invite novel coalitions. Environmentalists should like the long-overdue commitment to carbon pricing. Growth advocates should embrace the reduced regulation and increased policy certainty, which would encourage long-term investments, especially in clean technologies. Libertarians should applaud a plan premised on getting the incentives right and government out of the way. Populists should welcome the distributive impact.
According to a recent Treasury Department study, the bottom 70 percent of Americans would come out ahead under a carbon dividends plan. Some 223 million Americans stand to benefit.
The idea of using taxes to correct a problem like pollution is an old one with wide support among economists. But it is our unique political moment, combined with the populist appeal of dividends, that may turn the concept into reality.
Republicans are in charge of both Congress and the White House. If they do nothing other than reverse regulations from the Obama administration, they will squander the opportunity to show the full power of the conservative canon, and its core principles of free markets, limited government and stewardship.
A repeal-only climate strategy would prove quite unpopular. Recent polls show that 64 percent of Americans are concerned about climate change, 71 percent want America to remain in the Paris agreement, and an even larger share favor clean energy. If the Republican Party fails to exercise leadership on our climate challenge, they risk a return to heavy-handed regulation when Democrats return to power.
Much better would be a strategy of “repeal and replace.” This would be pro-growth, pro-competitiveness and pro-working class, which aligns perfectly with President Trump’s stated agenda.
President Trump’s daughter Ivanka and her husband Jared Kushner, a senior White House adviser, pushed to exclude criticism of a global climate deal from a forthcoming executive order, The Wall Street Journal reported Thursday evening.
Several people familiar with the move told the newspaper that the language was axed from an earlier draft of the order after Ivanka and Kushner intervened.
Trump is expected to sign at least two orders within days aimed at unraveling former President Barack Obama‘s environmental and climate regulations, according to the newspaper.
One White House official told the Journal that Kushner and Ivanka Trump are considered to be a moderating influence on the president’s views on environmental issues and climate change.
Trump, who previously called climate change a hoax created by the Chinese, was highly critical of his predecessor’s environmental policy on the campaign trail and pledged to backtrack on the climate deal reached by the Obama administration and nearly 200 countries in Paris in late 2015.
White House press secretary Sean Spicer on Thursday declined to say whether Trump plans to withdraw from the accord, deferring to Secretary of State Rex Tillerson, who the Journal noted backed the Paris deal while serving as CEO of Exxon Mobil Corp.