Oil and gas giants BP and Shell are donating $1 million each over two years to a Republican-backed group urging Congress to pass a federal carbon tax to fight climate change.
The two companies are providing money to Americans for Carbon Dividends, the advocacy arm of the Climate Leadership Council, a group led by former Republican Secretaries of State James Baker III and George Shultz that is promoting a carbon tax plan that would return the revenue to taxpayers.
BP and Shell’s action reflect oil and gas companies’ intentions to move beyond just rhetorical support for carbon pricing proposals, but a willingness to also dedicate money to lobby for them.
“The additional members who contributed show we are continuing to increase our momentum in support of the plan,” former Rep. Ryan Costello, R-Pa., the executive director of Americans for Carbon Dividends, told the Washington Examiner. “The polling clearly reflects Republican voters want the Republican Party to lean in with a proactive bipartisan solution to reduce carbon emissions.”
BP and Shell join industry competitors ConocoPhillips and Exxon Mobil, which previously donated to Americans for Carbon Dividends. Exxon pledged $1 million over two years, while ConocoPhillips committed $2 million over two years.
Shell and BP are joining a coalition of nearly 100 companies for two days of lobbying on Capitol Hill this week geared toward generating support for a carbon tax.
“It’s our hope Shell’s support of AFCD and like-minded coalitions ultimately leads to legislation that establishes a national price on carbon,” Shell U.S. President Gretchen Watkins told the Washington Examiner.
Businesses and economists contend a carbon tax is the simplest and most efficient way to address greenhouse gas emissions by applying a per-ton fee for large emitters like power plants and refineries.
Supporters view the approach as a market-based solution, one that would encourage energy producers to switch to cleaner non-fossil fuel alternatives if doing so costs less than paying the tax.
The Climate Leadership Council proposal backed by oil and gas companies would impose a gradually rising carbon tax beginning at $40 per ton and return the money to American people through equal quarterly payments to offset higher energy prices.
A family of four would receive roughly $2,000 per year in dividends, the group said.
Economic studies show the majority of households would receive more in rebates than they pay in additional taxes, including low-income households.
As part of a “grand bargain” to win over industry, the plan would also scrap carbon regulations of power plants imposed by the Environmental Protection Agency, which would be duplicative with a tax.
It also creates a border carbon adjustment, forcing exporting countries to pay a fee on carbon-emitting products coming into the U.S., to avoid harming the competitiveness of American industries.
And importantly for industry, the proposal would protect oil and gas companies from lawsuits by states and cities blaming them for climate change.
A coalition of House members recently introduced the first bipartisan carbon tax legislation in nearly a decade, with a plan that is broadly similar to the Climate Leadership Council proposal.
Rep. Francis Rooney, R-Fla., a co-sponsor of that bill, embraced BP and Shell’s decision to donate money to support a carbon tax but said he expects more from companies.
“Any and all industry support for pricing carbon is a welcome development,” Rooney told the Washington Examiner. “These major oil companies have important voices in the future of energy. I would also like to see these companies engage in direct advocacy for pricing carbon.”
Despite modest momentum, Congress is unlikely to pass carbon pricing legislation anytime soon because of strong resistance from most Republicans who view any form of carbon pricing as a tax increase.
In addition, companies have not spent significant money lobbying for carbon pricing relative to their budgets. In some cases, oil and gas companies try to block policy at the state level, usually through trade groups.
Large trade groups such as the American Petroleum Institute, the U.S. Chamber of Commerce, and National Association Manufactures have refused to endorse carbon pricing, even as member companies say they support it.
“I’d like to think this represents progress, but I remain skeptical given that Big Oil gives far more to trade associations and front groups that remain implacably opposed to a price on carbon,” Sen. Sheldon Whitehouse, D-R.I., a leading critic of the oil and gas industry who supports a carbon tax, told the Washington Examiner.
In recent years, activist shareholders have pushed for resolutions calling on major oil and companies to disclose the risk posed to their business by climate change, take actions to reduce that risk, and to re-evaluate their associations with trade groups.
Shell recently ended its membership in American Fuel and Petrochemical Manufacturers because of the trade association’s opposition to carbon prices; however, it has remained in the larger groups.
