Oil executives push carbon fee idea in US Senate

ExxonMobil and ConocoPhillips executives are joining other companies to lobby the US Senate for a "carbon dividends" plan that would put a fee on greenhouse gas emissions starting at $40/t and send the revenue back to taxpayers.

The idea has a slim chance of advancing soon because of widespread Republican opposition to a carbon tax and a lukewarm reaction to the concept from Democrats. But the executives' meetings this week with more than a dozen Republican and Democratic senators could lay the groundwork for a policy that supporters say would be more cost-effective and predictable than a mix of climate regulations.

"No other climate policy will go further in lowering emissions, stimulating innovation across the economy, boosting American competitiveness and supporting families than carbon dividends," said Climate Leadership Council chief executive Greg Bertelsen, whose group organized the meetings.

President Joe Biden has not backed a carbon tax, and instead wants to fund a $2 trillion infrastructure plan through higher corporate tax rates. The administration plans to achieve deep emission cuts through new climate regulations, subsidizing cleaner energy sources and enacting a national "energy efficiency and clean energy standard" that would target net-zero greenhouse gas emissions in the power sector by 2035.

But corporate supporters of a carbon tax say it could achieve larger emission cuts across the economy and at a lower cost. The carbon dividend idea would include a steadily rising carbon fee, typically paid for by refiners, importers, natural gas producers and coal mines. The Climate Leadership Council has proposed setting a $40/t carbon fee that would rise at 5pc/yr and then be refunded to taxpayers. It would pre-empt most climate rules and create a "border carbon adjustment" for US trade with countries that lack a comparable carbon pricing system.

"A well-designed price on carbon is the most effective way to reduce greenhouse gas emissions across the economy," said ConocoPhillips executive vice president Matt Fox, who is attending the meetings this week.

Democrats have yet to rally behind a carbon tax, taking lessons from a proposed "Btu tax" on energy in 1993 and a failed cap-and-trade bill in 2010 that created easy fodder for attack ads that said Democrats wanted to increase prices for gasoline and heating. The party also worries that a carbon tax, even one that is refunded, would have a disproportionate effect on low-income families.

Environmentalists have worried a carbon tax could worsen pollution in minority areas and not achieve the deep emission cuts needed to avert the worst effects of climate change. And the environmental community is loathe to trade away regulatory powers, which now require 60 votes in the Senate to change, for a carbon tax that could be invalidated with just 50 votes.

Other oil companies are working on legislative efforts in support of climate-focused regulations. BP, Shell, Norway's Equinor and Total over the last two weeks have said they support lawmakers using a fast-track mechanism called the Congressional Review Act to "disapprove" a rule imposed under former president Donald Trump that rolled back direct methane regulations.

By Chris Knight