By Karen Savage

Congressional leaders at a hearing on the economic and health consequences of climate change on Wednesday weren’t told that a prominent carbon tax proposal backed by the oil and gas industry would also immunize those companies from climate liability lawsuits. The proposal being discussed, the Climate Leadership Council’s Baker Shultz Carbon Dividends Plan, has drawn support from companies like Exxon, which is already battling several of those lawsuits.

“At the heart of the Baker-Schultz Plan is a ‘grand bargain’ that trades a robust and rising carbon fee for regulatory streamlining, thereby appealing to both environmentalists and businesses,” said Ted Halstead, chief executive of the Climate Leadership Council, a policy group, and Americans For Carbon Dividends, an industry-backed organization founded to promote the plan.

What Halstead did not mention in his oral testimony, or in the question and answer period that followed, is that the plan would let oil companies off the hook for climate-related damages. “Robust carbon taxes would also make possible an end to federal and state tort liability for emitters,” the plan reads.

Halstead was invited to testify before the House Ways and Means Committee at Wednesday’s hearing. During prepared testimony, Halstead, who founded the CLC in 2017, outlined details of the Baker-Schultz plan, which calls for a $40 per metric ton carbon tax in exchange for the climate liability waiver and a rollback of most greenhouse gas regulations.  

The hearing, which lasted more than four hours, included testimony from scientists and public health experts, including Dr. Katherine Marvel, associate research scientist at NASA Goddard Institute for Space Studies.

The Ways and Means Committee has jurisdiction over taxation and tariffs, as well as programs like Social Security, Unemployment and Medicare. The hearing was meant to delve into the economic and public health impacts of climate change. Halstead was invited to speak about the Baker-Schultz carbon tax proposal.

The plan proposes a gradually rising carbon fee, with all of the proceeds paid to Americans in a monthly dividend payment. For companies that import or export goods to countries without a carbon pricing system, a border adjustment would be specified.

Halstead said the fee would add about 36 cents to the cost of a gallon of gas.

The plan also includes what it calls “regulatory simplification:” a rollback of carbon dioxide emissions regulations. The plans authors claim the program would reduce emissions more than all current and prior climate regulations.

Although most U.S. taxpayers would benefit from monthly dividend payments, none of the proceeds would help cities and states pay for the astronomical costs of climate mitigation and adaptation.

The Climate Leadership Council and Americans for Carbon Dividends, which has spearheaded the push to implement the Baker-Schultz Plan, have worked to garner support for the plan over the past year, placing op-eds in several media outlets. Most do not mention that the plan would eliminate climate liability suits.

“It’s no surprise that the CLC doesn’t talk about the permanent legal immunity provision lurking inside their fossil fuel-funded Trojan Horse,” said Kathrin Sears, supervisor for Marin County, which filed one of the liability suits pending against fossil fuel companies. Marin, along with the county of San Mateo and the city of Imperial Beach, Calif. filed sued 37 companies in 2017 seeking compensation for climate damages.

“Letting oil, gas, and coal companies off the hook means taxpayers from Marin to Miami will have to pay tens of billions of dollars in order to protect our communities from the climate change-related costs and damages those companies knowingly caused,” Sears said.

According to Halstead, the Climate Leadership Council has also coordinated a bipartisan statement supporting carbon dividends signed by more than 3,500 economists and published in the Wall Street Journal, although the statement did not directly support the Baker-Schultz Plan.

Founding members of the Climate Leadership Council include oil giants Exxon, BP, Shell, and Total, corporate giants P & G, Johnson & Johnson, Pepsico, and Excelon. Former Fed chairman Ben Bernanke, former New York City Mayor Michael Bloomberg and former EPA administrator Christine Todd Whitman are also founding members, along with the environmental organization The Nature Conservancy.  

Halstead praised Microsoft for recently joining the group.

Microsoft is based in King County, Wash., which has filed a liability suit against Exxon, Shell, Chevron, BP and ConocoPhillips. The county alleges that the companies knew for decades about fossil fuels’ role in driving climate change and the potential impacts but deliberately failed to inform the public about those risks.  The county is demanding the oil companies pay compensatory damages into an abatement fund to help cover the costs of protecting its residents and property.

By Karen Savage

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.

By Karen Savage

A new carbon tax bill proposed on Monday would create a moratorium on enforcement of Clean Air Act regulations, but would still allow lawsuits aimed at holding the fossil fuel industry liable for climate change-related damages.

The Market Choice Act, introduced by Rep. Carlos Curbelo (R-Fla.) and co-sponsored by Rep. Brian Fitzpatrick (R-Penn.), outlines emission reduction goals and proposes the establishment of a temporary performance-based moratorium on enforcing Clean Air Act regulations in exchange for meeting those goals. The bill also calls for a repeal of the federal gas and diesel taxes.

Unlike another plan that has drawn backing from the fossil fuel industry—the Baker-Schultz plan—Curbelo’s bill does not discuss any waiver of climate liability suits and fossil fuel companies could still be held accountable for climate-related damages.

Any carbon tax faces long odds of being passed by the current Congress. Last week, the House passed a resolution sponsored by House Majority Whip Steve Scalies (R-La.) condemning a carbon tax. Only six Republicans – including Curbelo – voted against the resolution. Forty-one conservative groups signed a letter supporting it.

Curbelo, whose south Florida constituents are grappling with the effects of climate change, acknowledged the bill will be quickly denounced by many, but said he hopes critics instead offer constructive criticism that will lead to future legislation.

“It [the bill] will spark an important debate about investing in our country’s infrastructure, the way we tax and what to do to protect the environment,” said Curbelo, adding that he believes that one day his bill or similar legislation will become law.

The plan starts with an initial tax of $24 per ton on carbon emissions and includes a 2 percent increase annually. The heads of the EPA and Treasury Department would meet every 2 years to determine if goals for the previous years have been met. A provision allows for higher increases if intermediate goals have not been reached.

Long-term goals of the bill are to reduce emissions from fossil fuel combustion and additional emissions from non-fossil fuel sources, relative to 2005 levels, by 27-32 percent by 2025 and by 30-40 percent by 2032. If the goals are met, the moratorium on enforcement of Clean Air Act regulations would expire in 2033.

The bill calls for 70 percent of the revenue to go to the Highway Trust Fund, which will replace revenue lost by the elimination of the federal gas tax. The Highway Trust Fund finances the bulk of the federal government’s spending for highways and mass transit.

Other proceeds would go to a state grant program for low-income households and to help fund projects dealing with chronic coastal flooding mitigation and adaptation.

Smaller amounts are slated to go toward emissions reduction research, reforestation, environmental incentives programs, mine cleanup, weatherization and conservation programs. An assistance fund for displaced energy workers would also be created.

Bob Perciasepe, president of the Center for Climate and Energy Solutions and former deputy administrator of the EPA, said the Market Choice Act offers Congress an excellent starting point for crafting a market-based solution.

“It demonstrates the potential fiscal benefits of a carbon price, protects low-income families, and offers a promising way to balance pricing and regulatory approaches to ensure strong climate benefits,” Perciasepe said.

Dr. Andrew Steer, president and chief executive of World Resources Institute, a global research agency, said the bill brings renewed hope for bipartisan cooperation on climate change.

“This bill reflects the growing understanding that we can address dangerous emissions and at the same time generate revenue that can be used to strengthen the nation,” said Steer, adding that climate impacts are increasing and do not distinguish between political parties.

The Columbia Center on Global Energy Policy Center, which last week released a series of carbon tax studies, conducted an independent analysis of the impacts of Curbelo’s bill and predicted it will lead to economy-wide net greenhouse gas emissions reductions. Those reductions, the studies say, would outpace the United States’ promised commitments to the Paris climate agreement.

The center’s analysis predicts that crude oil production will not be significantly affected and fuel prices will increase by less than 10 cents per gallon. Natural gas production is expected to initially increase slightly, then fall below current production by 2030. Coal production is expected to continue to fall.

Kate Gordon, a fellow at the Columbia Center and vice chair of climate and sustainable urbanization at the Paulson Institute, said a highlight of the plan is that it returns 10 percent of the proceeds to households who might end up paying more under the plan.

“It essentially offsets all of the higher energy prices to those households, so it makes them whole,” said Gordon, who added that it’s important to note that Curbelo’s plan doesn’t return all proceeds, as some plans have proposed, including Baker-Schultz.

Gordon said electricity prices under the plan are predicted go up about 8 percent, but the amount consumers pay will likely go down because of increased energy efficiency.

“Sometimes just looking at the cost is not that relevant when it comes to what most people pay attention to. Most people cannot tell you their kilowatt hour cost, but they can tell you how much their bill is,” she said, adding that most consumers will not see an increase in the amount they pay.

The proposal also includes the creation of a National Climate Commission that would “set goals for emissions reductions that reflect the latest scientific findings of what is needed to avoid serious human health and environmental consequences of a changing climate.”

Curbelo said his south Florida district is already facing many impacts from climate change: rising sea levels, chronic coastal flooding, threats to drinking water from saltwater intrusion in the Everglades and ocean acidification that damages coral reefs and threatens the livelihoods of fishermen and charter boat captains.

Gordon said increasingly severe climate impacts are prompting legislators like Curbelo to approach the need for climate solutions with a renewed urgency.

“I just think it’s an interesting moment where that physical impact piece is really bringing this issue to the fore, whether it’s wildfires, sea level rise, storms; it’s what people are starting to pay attention to across the aisle because it’s very local and very specific and very immediate,” Gordon said.

Curbelo implored his colleagues to work together to preserve the planet and to protect future generations.

“I remind my conservative colleagues who often decry our nation’s growing debt that saddling young Americans with a crushing environmental debt—meaning an unhealthy planet where life is less viable—is at least as immoral as leaving behind an unsustainable fiscal debt,” Curbelo said.