Exxon, Shell, and BP support a Republican plan to do something about climate change

A carbon tax has long been touted as the free-market climate action path.

CREDIT: AP Photo/Branden Camp
CREDIT: AP Photo/Branden Camp

A group of major businesses, including Johnson & Johnson, General Motors, and fossil fuel giants ExxonMobil, BP, and Shell, announced Tuesday they have joined a Republican-led council that proposes to put a $40 tax on carbon emissions.

The companies, along with a list of high profile business people and two environmental groups, are part of the Climate Leadership Council, whose platform was written by former cabinet members James Baker and George Shultz.

Representatives from the council met with the White House in February, but there have been no signs from the administration that a carbon tax is on the table. To the contrary, President Trump has moved significantly away from climate action. His EPA administrator, Scott Pruitt, has rolled back a number of rules intended to limit greenhouse gas emissions, and the president himself announced that the United States would leave the historic Paris climate agreement, a 2015 pact to limit warming to less than 2°C (3.6°F).


In an op-ed in the Washington Post on Tuesday, former Secretary of State Schultz and former Secretary of the Treasury Larry Summers, wrote that the United States needs to find another way.

“We do not believe the American people will for long wish to stand apart from the global effort to limit the damage from climate change,” they wrote.

The council’s plan calls for starting fee of $40 per ton on carbon emissions, which rises over time and is returned to taxpayers via the Social Security Administration. It also includes a “border carbon adjustment” — in which goods coming from outside the United States would be charged for their carbon footprints — and “significant regulatory rollback,” intended to take carbon regulations out of the hands of the EPA.

“A carbon tax set at $40 per ton would achieve substantially greater reduction in greenhouse-gas emissions than all of the regulation now on the table,” Schultz and Summers wrote. “The application of a border carbon adjustment that levied a tax on the carbon content of imported products would incent other countries to adopt carbon pricing, increasing its impact and preventing free-riders. So the carbon dividend approach is best for the environment.”

A carbon tax — particular a revenue neutral carbon tax, such as this one — has long been seen as a potential meeting ground for anti-regulation Republicans and pro-action Democrats. Because while the majority of Republicans in Congress (including 75 percent of Republican senators) deny that climate change is caused by human action, not all Republicans — and not all fossil fuel companies — are so committed to keeping their heads in the sand.


The founding members represent a range of moderate Democrats, Independents, and Republicans. Billionaire and former New York City Mayor Michael Bloomberg, physicist Stephen Hawking, and Walmart heir Rob Walton are members, as is Steven Chu, a physicist who served as Secretary of Energy under the Obama administration. In addition to the individuals and corporations, two NGOs, Conservancy International and The Nature Conservancy, are on the council. Incidentally, The Nature Conservancy was one of two environmental groups that are known to have gotten a meeting with Administrator Pruitt since he started at the EPA.

It is not entirely surprising that the oil and gas majors joined the council. Exxon and other companies have recently come to admit that carbon emissions are pushing the world to an unlivable climate and have publicly supported the Paris climate agreement. Even Secretary of State Rex Tillerson, who was CEO of Exxon prior to joining the administration, told Congress that he favored staying in the agreement.

But, of course, as a major extractor, distributor, and purveyor of carbon products, Exxon has a complicated relationship with climate change and the science behind it. Earlier this month, New York State, whose attorney general is pursuing a wide-ranging investigation into whether Exxon misled investors about the risk to its business from climate change, filed court documents alleging that Exxon set different costs for carbon in its public and internal documents. Internally, the company estimated that the cost for emitted a ton of carbon would be $40 by 2030. Its public documents suggested the cost would be $60 a ton.

And last week, at the company’s annual meeting, shareholders voted in favor of a resolution calling for ExxonMobil to disclose its climate risks. Chairman and CEO Darren Woods and the rest of the board had recommended against the resolution.

“We have been encouraged by the proposal put forth by the Climate Leadership Council as it aligns closely with our longstanding principles,” Woods said in a statement Tuesday. “We are pleased to support the Council as a Founding Member and work constructively to support their policy development process.”


Some environmental groups scoffed at the oil and gas giant’s participation in the group, saying the plan lets polluters off the hook for any previous emissions.

“Buried in pages of supposedly ‘free market’ solutions is a new regulation exempting polluters from facing legal consequences for their role in fueling climate change,” Greenpeace’s Naomi Ages said in a statement. “ExxonMobil will try to dress this up as climate activism, but its key agenda is protecting executives from legal accountability for climate pollution and fraud.”

UPDATE: This story has been updated with comments from Greenpeace.