The American Petroleum Institute is considering endorsing a carbon price. That’s a big shift, but a carbon price alone is not good climate policy.
Read the full Risky Climate column at Bloomberg Green.
The American Petroleum Institute is debating whether to support a price on carbon. It’s not every day that a top lobbying group contemplates taxing itself. That’s big news, and it’s tempting to call it a win for the climate.
Not so fast. While API’s expected endorsement is indeed a sign of the times, it’s not a good one.
For one, API is late to the party. BP Plc, ConocoPhillips, Exxon Mobil Corp., Royal Dutch Shell Plc, Total SE and many others have supported just such a price for a while. In January, Total SE quit its API membership because of a conflict over climate change policy. BP, Shell and others said that they would remain in the group to influence discussions from within. In a statement at the time, Shell said that API was moving closer to Shell’s own stated views on climate policy. That seems to have finally happened.
Earlier this week, Megan Bloomgren, senior vice president of communications at API, said in a statement that the industry is “evolving,” and “our efforts are focused on supporting a new U.S. contribution to the global Paris agreement.”
API’s potential support for a carbon price comes with a serious catch. A draft statement reads, as reported by the Wall Street Journal, “API supports economy-wide carbon pricing as the primary government climate policy instrument to reduce CO₂ emissions while helping keep energy affordable, instead of mandates or prescriptive regulatory action.”
The group has signaled an embrace of carbon pricing because it sees the writing on the wall. In fact, that writing has been on the wall for a while.
In 2009 and 2010, during President Obama’s first term in office, the policy on the table was a comprehensive climate and energy bill, centered on an economy-wide emissions trading system akin to what the European Union and California have in place. Such a cap-and-trade system has two parts: a cap on emissions, and a flexible way to trade individual emissions allowances. The result is a carbon price now hovering around $18 per ton of CO₂ in California and around €40 ($48) in Europe, with signs pointing to significantly higher prices.
Continue reading at Bloomberg Green.