A broad carbon tax coalition

By Pete Trelenberg, ExxonMobil’s environmental policy and planning manager.

For some time now, it’s been apparent that a uniform price of carbon applied consistently across the economy is a sensible approach to reducing emissions. Specifically, a revenue-neutral carbon tax is one option being considered by policymakers that offers the best prospects for progress at the lowest economic cost to society.

At ExxonMobil, we’ve long thought this is a serious idea that deserves a hearing.

Last month, a new coalition was unveiled to make the case for a market-based climate solution that considers both economic growth and environmental progress.

ExxonMobil is among the founding members of the Climate Leadership Council, joining other companies such as General Motors, PepsiCo, BP, and Johnson & Johnson. The Council also includes key individuals such as Michael Bloomberg, Lawrence Summers, Steven Hawking, Steven Chu, Marty Feldstein, Greg Mankiw, Vinod Khosla, and Rob Walton. Two prominent environmental organizations – The Nature Conservancy and Conservation International – are on board as well.

Our support is anchored in a proposal put forth in February by former U.S. Secretaries of State George Shultz and James A. Baker III in The New York Times. More recently, Secretary Shultz joined with former Mr. Summers – a former U.S. treasury secretary – to expound on these ideas.

These statesmen argue for a carbon tax that calls for a gradually rising price on carbon. The revenues generated by the plan would be returned to American energy consumers, and not kept by government.

Importantly, Secretaries Shultz, Baker and Summers also call for the rollback of existing carbon regulations that would be made superfluous by implementation of such a tax. Additionally, they advocated border carbon adjustments to level the playing field and promote American competitiveness.

It’s an approach consistent with ExxonMobil principles.

In my view, effective policies will be those that:

• promote global participation
• let market prices drive the selection of solutions
• ensure a uniform and predictable cost of greenhouse gas emissions across the economy
• minimize complexity and administrative costs
• maximize transparency and
• provide flexibility for future adjustments to react to developments in climate science and the economic impacts of climate policies.

Those are the aims behind the founding of the new coalition – which is the beginning of a process, not a culmination. My colleagues at ExxonMobil and I look forward to working with the Climate Leadership Council to help effect positive solutions to the risks posed by climate change.