Oil majors could waste trillions if climate targets reached; Exxon most exposed

The Climate Leadership Council, developed by former cabinet members James Baker and George Shultz, have crafted a plan created to fight climate change by taxing carbon emissions and then redirecting that levy to taxpayers.

We are convinced that the carbon dividends approach first put forward by one of us (Shultz) along with former secretary of state James A. Baker III a few months ago can strengthen the USA economy in ways highly valued by both the left and right and simultaneously spur global efforts to address climate change. "As companies push toward digital transformation, they can realize quantifiable energy savings and cut carbon emissions while increasing operational productivity".

Other Corporate and NGO Founding Members of the Council include: BP, ExxonMobil, General Motors, Johnson & Johnson, PepsiCo, Procter & Gamble, Royal Dutch Shell, Santander Bank, Total, Unilever, Conservation International and The Nature Conservancy. The President is trying to undo the Obama administration's Clean Power Plan limiting power plant carbon emissions, even though the rollback is likely to cost taxpayers billions and cause thousands of preventable deaths from increased pollution.

"The oil giants could simply pass the cost of new taxes on to customers", the story says. To protect USA companies, the plan recommends a border tax adjustment to increase the cost of goods arriving from nations that do not have a similar carbon tax.

"Investors in oil and gas companies have been in the dark about their exposure to climate risk, but they will now be able to confront companies with precise information and ask hard questions about how they intend to deal with potentially stranded assets". "None of those has gotten very far", Gerrard said, but "there continues to be talk of more".

The Climate Leadership Council's plan sets an initial tax of $40 per ton of carbon dioxide produced, which would add 36 cents to the cost of each gallon of gasoline sold. The carbon penalty will rise over time, squeezing demand for fossil fuels.

That could mean a family of four would get $2,000 in dividend payments in the first year, the council's site states.

Chief Executive of Exxon Darren Woods blogged in February that he saw a "revenue-neutral carbon tax" as a "sensible approach" to reducing emissions, WSJ reported.

"Exxon is signing onto this carbon tax proposal because they know it's dead-on-arrival, but hope it will distract from the ongoing investigations into whether the company lied to the public and its investors about climate change", Jamie Henn, 350.org strategic communications director, said.

Shultz, a former USA secretary of labor, treasury and state, is a distinguished fellow at the Hoover Institution. A company spokesman said the liability component of the plan was not part of the company's decision to endorse it.

Specifically, the average oil price would have to be around $100 a barrel over the long term for it to be profitable (though not socially or environmentally conscious) for companies to pursue the projects listed above, beyond the 2⁰C limit.

For those reasons, some environmentalists are skeptical of the plan. Exxon, GM and the other corporations are joining alongside astrophysicist Stephen Hawking, hedge-fund magnate Ray Dalio, Harvard economist and former Obama economic adviser Larry Summers and others.

The plan's Republican authors include James A. Baker III and George P. Shultz, both former secretaries of state, and Henry M. Paulson Jr., a former secretary of the Treasury.

"It may take another presidential election for this to be fully enacted, " Ted Halstead, founder, president & CEO of the Climate Leadership Council, told CNN.

  • Zachary Reyes