The oil and gas industry’s top lobbying arm, the American Petroleum Institute, is edging toward supporting a carbon tax. Later this month, API will issue a formal notification. Such a move would make fossil fuels more expensive. Additionally, it would stimulate renewable energy initiatives.
Scientists agree that global warming is caused mainly by human activity. Specifically, carbon dioxide is warming the world.
API issued the following statement: “API has convened top industry officials throughout the supply chain to incubate a host of policy solutions and industry actions to shape a lower carbon future. API supports economy-wide carbon pricing as the primary government climate instruments to reduce CO2 emissions while helping keep energy affordable instead of mandates or prescriptive regulatory action.”
Enacting a carbon tax currently is difficult because:
- The Senate is closely divided.
- Imposing new energy costs on a pandemic-ravaged economy has negative repercussions across the political spectrum.
As API senior vice president of communications Megan Bloomgren said, “The millions of scientists, engineers, geologists and problem solvers in our industry are evolving, innovating, scaling technology and solving complex challenges every day to meet the world’s energy demands and drive down U.S. emissions, and our efforts are focused on supporting a new U.S. contribution to the global Paris agreement.”
Fossil fuel companies who API represents recognize Washington’s shift on climate policy as a real and significant threat. API responds that the energy industry can play a positive role in helping the world address climate change.
A carbon tax would provide a financial incentive for industries to reduce the amount of carbon dioxide, methane and other greenhouse gases they emit. Its advantage is that it is predictable; the disadvantage is that the price might not be high enough to act as a disincentive.
Other advantages: In the short run, putting a price on greenhouse gas emissions could give natural gas an even greater edge over dirtier-burning coal. It also would preempt regulation governing carbon dioxide emissions from power plants and other industrial facilities.
Other disadvantages: A carbon tax provides a silver lining for polluters. For example, unlike regulations restricting drilling or mandating clean energy, a carbon tax would not bar companies from extracting natural gas or force fossil fuels out of the nation’s electricity mix.
President Joe Biden campaigned on treating climate change as a crisis.
The Biden administration has decided to use a figure of $51 a ton (translates to approximate 50 cents per gallon) to guide its internal decisions. The price, known as the social cost of carbon, will affect everything from new coal leasing on federal land to the type of steel used in taxpayer-funded infrastructure projects.
The Biden administration is evaluating measures that would slash fuel consumption, limit methane emissions and influence climate measures required by all signatories to the Paris climate accord. On Jan. 21, the United States rejoined the Paris climate accord.
Economists support a carbon tax because it is a simple, efficient way to discourage emissions and ensure that the negative costs of climate change are embedded in the price of carbon-intensive products, from gasoline to cement. Treasury Secretary Janet Yellen dubbed a carbon tax “the textbook solution to the problem of climate change.”
To the extent the U.S. takes decisive steps to reduce emissions, our efforts will be a catalyst for other nations to embrace similar policies. It is unlikely that poor and middle-income nations will curb their emissions if we do not take proactive steps. America’s wealth, national laboratories, universities, corporate giants and entrepreneurs will adopt novel approaches and technologies that will address climate change. In December, Princeton University published a report showing how American emissions by 2050 could be reduced to “net zero.”
Originally published in the Sarasota Herald-Tribune
