Exxon Funds Push for a Carbon Tax That Ends Climate Liability Suits

Exxon has announced it will pledge $1 million to Americans for Carbon Dividends, an advocacy campaign that backs a carbon tax plan, but one that would be coupled with rollbacks to environmental regulations and ending climate liability suits.

The Baker-Schultz Plan—named for its lead authors, former secretaries of state James A. Baker III and George P. Shultz—proposes a gradually rising carbon tax, with 100 percent of the proceeds paid to Americans in a monthly dividend. It was unveiled last year by the Climate Leadership Council, a nonprofit policy institute founded by author and policy entrepreneur Ted Halstead.

The council’s founding members include Exxon and other oil and corporate giants—among them, BP, Shell, Johnson & Johnson—as well as former New York Mayor Michael Bloomberg and former fed chairman Ben Bernanke. Greg Bertelsen, the council’s senior vice president, called Exxon’s donation a significant step in U.S. climate policy.

“It represents the first time an oil and gas oil major has made a significant contribution in support of a campaign to put a price on carbon,” said Bertelsen, who formerly served as senior director for energy and resources policy for the National Association of Manufacturers.

In return for what is a modest tax, the Baker-Schultz plan also calls for the rollback of greenhouse gas emissions regulations and an “end to federal and state tort liability for emitters.” That means the federal government would no longer have the ability to regulate climate pollutants and courts would have no role in determining whether industry should pay for impacts already caused by fossil fuel-driven global warming.

Kert Davies, director of the Climate Investigations Center, said it’s significant that when the plan was launched, no corporate members were involved publically.

“The most interesting thing to me is how Exxon has been behind this the whole way but was intentionally hidden from view,” Davies said.

“Are they shy? No, they know the optics,” he added.

Americans For Carbon Dividends is co-chaired by former Senators Trent Lott (R-Miss.) and John Breaux (D-La.), whose lobbying firm was hired to promote the plan. And according to its website, its communications is being led by Richard Keil, a former senior media relations advisor for Exxon. Keil is listed as a managing director for Hill+Knowlton, the firm that once represented tobacco companies as they tried to escape liability for the devastating health effects of smoking.

Exxon’s announcement came a day after the United Nations’ Intergovernmental Panel on Climate Change issued a landmark report warning that climate change is a much more dire and immediate problem than previously thought. In the report, scientists call for “unprecedented” action that would be needed to combat the effects of climate change.

To prevent catastrophic climate change, carbon emissions must be reduced by 45 percent from 2010 levels by 2030 and 100 percent by 2050, the report says. The use of renewable energy to generate electricity must increase from about 20 percent today to about 67 percent by 2050. It also calls for a robust carbon tax, large enough to raise the cost of fossil fuels to drive down their use and raise enough money to offset their detrimental impact on the climate.

“A price on carbon is central to prompt mitigation,” said the report’s authors. They estimate that to achieve needed emissions reductions, the price per ton of carbon dioxide pollution must range from $135 to $5,500 in 2030, and from $690 to $27,000 per ton by 2100.

A recent study by the University of Massachusetts found a carbon tax would have to reach $200 a ton to change consumer behavior and to keep low-income consumers from absorbing a disproportionately high amount of the costs.

The Baker-Schulz Plan starts the tax at $40 per metric ton, far below what the studies say would significantly reduce emissions. The plan does not specify how much it will rise or how the increases will be determined.

Bertelsen said that’s a detail that will be worked out over time by the council’s founding members, which in addition to the oil giants includes corporate giants P & G, Johnson & Johnson, Pepsico, and Exelon. Bernanke, Bloomberg and former EPA administrator Christine Todd Whitman are also founding members, along with the environmental organization The Nature Conservancy.

When asked repeatedly whether founding members would reconsider their stance on climate litigation, Bertelsen would only say that the Council is focused on solving the climate problem and transitioning to a low-carbon economy.

Exxon spokesman Scott Silvestri told Bloomberg that applying a uniform cost across the economy is consistent with Exxon’s principles on how to manage the risk of climate change. He said the company has consistently backed a carbon tax that returns proceeds to the public and not the government, but Exxon has also long supported organizations like the American Legislative Exchange Council that have lobbied vigorously against carbon taxes of any kind.

Under the plan, U.S. taxpayers would benefit from monthly dividend payments, but none of the proceeds would help cities and states pay the skyrocketing costs of climate mitigation and adaptation.

Peter Frumhoff, director of science and policy and chief climate scientist at the Union of Concerned Scientists, said he remains skeptical and suggested the oil giant lay out a plan for bringing company-wide carbon emissions to net-zero by mid-century. That would be consistent with the Paris Climate Agreement that Exxon also says it supports.

“I’ll take ExxonMobil claims of support for a carbon dividend seriously when it stops providing far larger sums to the U.S. Chamber of Commerce and other lobbying groups that oppose the same climate policies,” Frumhoff said.