<article><p class="lead">US oil and finance industry leaders are coming into alignment on their desire to put a price on carbon emissions, despite the idea receiving scant support from either party in Congress.</p><p>Business groups have for months been rallying behind a carbon price — in the form of a tax or other mechanism — that they hope could bring an end to abrupt policy shifts with each leadership change in the White House. Industry group the American Petroleum Institute (API) is considering offering support for carbon pricing — an idea that is backed by some top federal regulators.</p><p>But congressional leaders see little chance of a carbon price becoming law, especially when the economy is still reeling from Covid-19. Republican rank-and-file members see carbon pricing as a federal tax hike that would hurt consumers, and many still side with former president Donald Trump, who rejected climate science in favour of maximising oil and gas production.</p><p>Democrats stung by the failure of a 2010 emissions cap-and-trade bill are wary of giving critics ammunition as they defend thin majorities in Congress. "The votes are just not there for a price on carbon," House of Representatives energy committee chairman Frank Pallone said this month while introducing a bill to set a "clean energy standard" that would require all electricity to have no carbon emissions by 2035.</p><p>The next best chance for a carbon price to advance might be in President Joe Biden's plan for a $2 trillion infrastructure package. A carbon tax of $60/t, increasing by 5pc/yr, would generate $2.3 trillion by 2030, independent think-tank the Tax Foundation says. But Biden's commitment not to raise taxes on all but the wealthy has ruled out a gasoline duty hike, transportation secretary Pete Buttigieg says. That pledge could equivalently block Biden's ability to support a carbon price.</p><h3>‘Seismic event'</h3><p class="lead">The API is yet to announce a new position on carbon pricing, but its potential endorsement would be a substantial shift for a lobbying group with major sway on energy policy. "If the API endorses pricing carbon emissions, it will be a seismic event," says Alex Flint, executive director of the Alliance for Market Solutions, an organisation of conservative leaders that lobbies for carbon pricing.</p><p>But the oil and gas sector remains highly divided on the issue, with small producers worried about the potential economic hit. The API's consideration of carbon pricing is a "PR stunt", and if enacted the effects would be felt most by the working class, says the Domestic Energy Producers Alliance, a group led by upstream independent Continental Resources' executive chairman Harold Hamm. </p><p>Even without a carbon price, the Biden administration is considering ways to pressure other countries on climate goals. The US Trade Representative says it will explore ways to address greenhouse gas emissions through global trade, including the "consideration of carbon border adjustments". Treasury secretary Janet Yellen says climate change cannot be solved without "effective carbon pricing".</p><p>Democrats are moving closer to holding a majority at commodities regulator the CFTC, with the departure this month of Republican member Heath Tarbert. Biden's expected nomination of new members would give Democrats a 3:2 majority, pending a confirmation vote. CFTC acting chairman Rostin Behnam has led a climate-focused advisory committee of finance and energy officials who last year supported putting an economy-wide price on carbon. </p><p>"It was quite remarkable and a very strong statement for them all to coalesce around the importance of having a price on carbon," Behnam said at IHS Markit's CERAWeek conference this month. "As long as it is something that is free, certainly that is not going to help in addressing climate change."</p><p class="bylines"><i>By Chris Knight</i></p></article>
