Where Does ExxonMobil Stand on Carbon Taxes? (Updated Dec. 27, 2012)

by Marlo Lewis on December 11, 2012

in Features

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Yesterday on NPR’s radio program To the Point, I said it was dishonorable for ExxonMobil to support a carbon tax. I compared ExxonMobil’s reported embrace of carbon taxes to Enron’s lobbying for the Kyoto Protocol.

Enron was a a major natural gas distributor and saw in Kyoto a means to suppress demand for coal, natural gas’s chief competitor in the electricity fuel market. ExxonMobil is a major natural gas producer. So I took this to be another case of political capitalism – corporate lobbying to replace a competitive market with a rigged market to enrich a particular firm or industry at the expense of competitors and consumers.

The NPR program host said something like “even oil companies like ExxonMobil now support a carbon tax,” alluding to a Nov. 16 Bloomberg Businessweek article titled ”Carbon Fee From Obama Seen Viable With Backing From Exxon.” I too had read the article, and ExxonMobil’s reported behavior struck me as imprudent as well as unkosher. A carbon tax could come back to bite natural gas producers big time if the EPA decides, along the lines of Cornell University research, that fugitive methane emissions from hydraulic fracturing make natural gas as carbon-intensive as coal.

The Bloomberg article quoted an email from ExxonMobil spokesperson Kimberly Brasington:

Combined with further advances in energy efficiency and new technologies spurred by market innovation, a well-designed carbon tax could play a significant role in addressing the challenge of rising emissions. A carbon tax should be made revenue neutral via tax offsets in other areas.

As explained previously on this site, a revenue-neutral carbon tax is a political pipedream, as is a carbon tax that preempts EPA and State-level greenhouse gas regulations. ExxonMobil is too savvy not to know this. So I interpreted Brasington’s caveats (“combined,” “well-designed,” “revenue-neutral”) to be the typical K Street evasiveness of those wishing to signal rather than declare their support for a controversial policy.

But articles published today in FuelFix and The Hill contend that ExxonMobil “does not support” a carbon tax and is “not encouraging policymakers” to impose such a tax. Both articles quote ExxonMobil VP for public affairs and government relations Ken Cohen:

If policymakers are going to adopt a measure, a regime to affect or put in place a cost on the use of carbon across the economy, then as we look at the range of options, our economists and most economists would support a revenue-neutral, economy-wide carbon tax as the most transparent and efficient way of putting in place a cost on the use of carbon.

Not supporting and not encouraging is not the same as opposing. Indeed, not opposing while saying But if you’re gonna do it, do it like this! can be a low-profile way to support and encourage! Also, why say anything favorable about carbon taxes when cap-and-trade is dead and there’s no longer even a weak prudential case for supporting carbon taxes as the lesser evil?

According to FuelFix, Cohen rejected a carbon tax “imposed solely to raise revenue.”

“If the policy objective is to raise revenue, it’s not on the table,” he [Cohen] said, insisting that a better way to send dollars to federal coffers would be to open up more public lands and waters for drilling.

But of course the leading objective for many proponents is precisely to raise revenue.* Carbon taxes have suddenly emerged as a hot topic for one reason only — their potential to sustain Washington’s spending addiction for a few more years. The folks at ExxonMobil have to know this.

So the question returns: Why on Earth at this time is ExxonMobil making happy noise about carbon taxes?

* Ditto for cap and trade. As my colleague FOIA master Christopher Horner discovered, the Obama Treasury Department estimated cap-and-trade would bring in revenues up to $400 billion annually from carbon permit sales — a share of GDP roughly equal in size to the corporate income tax.

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Update (Dec. 27, 2012)

Over at MasterResource.Org, my colleague Rob Bradley reproduces Enron Lobbyist John Palmisano’s Dec. 12, 1997 memo on the Kyoto climate treaty conference crowing that, “This agreement will be good for Enron Stock!!”

Palmisano lobbied for Kyoto’s three main policy mechanisms – joint implementation, clean development, and emissions trading. He enthused:

The endorsement of joint implementation within Annex-1 is exactly what I have been lobbying for and it seems like we won.  The clean development will be a mechanism for funding renewable projects. Again, we won. (We need to push for natural gas firing to be included among the technologies that get preferential treatment from the fund.)  The endorsement of emissions trading was another victory for us.

Palmisano and Enron won plaudits at the Kyoto conference:

I gave three speeches and received an award on behalf of Enron. The speeches dealt with emissions trading, energy efficiency/renewable, and the role of business in promoting clean energy outcomes. The award came from the Climate Institute and was for Ken Lay and Enron for our work promoting clean-energy solutions to climate change.

Enron had become the green Left’s corporate darling. Palmisano reported:

Through our involvement with the climate change initiatives, Enron now has excellent credentials with many “green” interests including Greenpeace, WWF, NRDC, GermanWatch, the US Climate Action Network, the European Climate Action Network, Ozone Action, WRI, and Worldwatch. This position should be increasingly cultivated and capitalized on (monetized).

(Parenthetically, I heard many times people refer to Enron in glowing terms. Such praise went like this: “Other companies should be like Enron, seeking out 21st century business opportunities” or “Progressive companies like Enron are….” Or “Proof of the viability of market-based energy and environmental programs is Enron’s success in power and SO2 trading.”)

In a separate column, Bradley explains that, “Enron, in fact, had no less than six profit centers tied to pricing carbon dioxide (CO2), and seven if CO2 were capped and traded.”

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