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"The Climes, They Are A-Changin`"; Or, Dylan Does Copenhagen

December 6th, 2009 No comments

Apologies, but I can`t resist:

I saw a news item earlier today – “Copenhagen climate summit borrows Dylan’s voice” – that indicates that the COP 15 organizers (the 15th Conference of the Parties to the UN Framework Convention on Climate Change, to which Pres. George H.W. Bush & Congress made US a party) are making informal use of Bob Dylan`s “A Hard Rain is Gonna Fall” as a conference theme (“UN to release ‘Hard Rain’ film with Bob Dylan tune on eve of climate talks | Spero News“). 

Well, a different Dylan song popped into my head; tweaked very slightly, it goes like this:

The Climes They Are A-Changin’

Come gather ’round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You’ll be drenched to the bone.
If your time to you
Is worth savin’
Then you better start swimmin’
Or you’ll sink like a stone
For the climes they are a-changin’.

Come writers and critics
Who prophesize with your pen
And keep your eyes wide
The chance won’t come again
And don’t speak too soon
For the wheel’s still in spin
And there’s no tellin’ who
That it’s namin’.
For the loser now
Will be later to win
For the climes they are a-changin’.

Come senators, congressmen
Please heed the call
Don’t stand in the doorway
Don’t block up the hall
For he that gets hurt
Will be he who has stalled
There’s a battle outside
And it is ragin’.
It’ll soon shake your windows
And rattle your walls
For the times they are a-changin’.

Come mothers and fathers
Throughout the land
And don’t criticize
What you can’t understand
Your sons and your daughters
Are beyond your command
Your old road is
Rapidly agin’.
Please get out of the new one
If you can’t lend your hand
For the climes they are a-changin’.

The line it is drawn
The curse it is cast
The slow one now
Will later be fast
As the present now
Will later be past
The order is
Rapidly fadin’.
And the first one now
Will later be last
For the climes they are a-changin’.

Dylan`s original, The Times They Are A-Changin` is here.

I intend no offense here to anyone; those with different predilections on climate and the problem of government and rent-seeking will see this and other Rorshach Blots differently.

But for readers that have made it this far, I note the following:

WSJ: In DC at the Economic Club, Exxon CEO Rex Tillerson again proposes a straight, rebated tax on carbon emissions (OR, climate policy gamesmanship & the importance of being earnest)

October 3rd, 2009 2 comments

Exxon CEO Rex Tillerson has done it again*, by proposing in a speech on October 1 in Washington, D.C. that the U.S. shelve cap-and-trade legislative approaches to managing greenhouse gas emissions in favor of direct carbon taxes that are rebated to consumers.  Tillerson`s full speech is here; the press release is here.

[*Again? It might be news to some readers, but Tillerson and other executives at ExxonMobil, which once funded Rob Bradley`s climate denial shop at IER (you know, the coal-funded think tank that funds Bob Murphy`s climate policy efforts) have rather clearly stated over the past few years that they
believe that man`s activities pose significant climate change risks and
that a globally coordinated government policy approach centered on
carbon pricing – and preferably carbon taxes over cap-and-trade – is
needed
. ]

The Wall Street Journal`s Environmental Capital blog provided coverage, summarizing both the substance of Tillerson`s remarks and noting both that his speech came just as the Senate rolled out its climate bill (Kerry-Boxer) counterpart to the House Waxman-Markey bill, and that people are already questioning Exxon`s motives.

For example, the Green Energy Reporter observed that while Tillerson has “distinguished company” in supporting carbon taxes, such as NASA climate scientist James Hansen (and others I`ve noted),  

[Tillerson] likely has some different motivations. Tillerson surely knows
that a carbon tax would be dead on arrival in Congress for any number
of reasons, mainly because legislators are already a long way down
the road on cap-and-trade and it would be almost impossible to change
course now. …

We think it’s fair to view Exxon’s opposition to cap-and-trade –
Tillerson’s reasonable critiques notwithstanding – as a tactic meant to
delay passage of meaningful legislation.

Poor Exxon; they`ve played the climate denial and delay game for so long and so consummately (the boy who cried “there`s no wolf” too many times?) that no one seems to be taking seriously their professions of change of heart (as I noted a month or so, when Joe Romm devoted a post on “grassroots” efforts by some oil firms to criticizing PAST activities of Exxon) , even as they are now backing their words with deeds (such as significant investments climate change basic research and biofuels).

In anticipation of such criticism, Tillerson has tried to directly address this skepticism in his speech (emphasis added):

These costs and consequences inherent to cap-and-trade schemes have led
many policy experts and economists to prefer another course of action
to reduce greenhouse gas emissions.  That other option is a
revenue-neutral carbon tax.
  I know that’s hard for a politician to
say, so we have given it a new name.  We call it a “refundable
greenhouse gas emissions fee.”

As
a businessman, I have to take a deep breath every time I speak about
this, because it’s hard for me to speak favorably about any new tax.  I
hope you see it shows how serious we are about this issue. …

Now, some people have suggested that a revenue-neutral carbon tax
has no chance of gaining sufficient support in Congress to become law.
 They say a carbon tax is too politically sensitive and that it is
easier and more politically expedient to support a cap-and-trade
approach, because the public will never figure out where it is hitting
them.
  They will just know they hurt somewhere in their pocketbook.

I
disagree with this assessment.  I believe the American people want
climate policy to be transparent, honest, and effective.
 Economists
generally agree that achieving a given emissions target costs less
under a tax or fee approach than under a cap-and-trade system.  I
firmly believe it is not too late for Congress to consider a carbon tax
as the better policy approach
for addressing the risks of climate
change.  Indeed, there has never been a more opportune time for
Congress to pursue this course of action.

As a follow-up to the citation of their first comments by the WSJ, the folks at Green Energy News came back and noted that there are very legitimate concerns about cap-and-trade (citing commentary by Gregg Easterbrook that the Waxman-Markey bill “is nightmarishly bad legislation – more than 1,400 pages of
special-interest favors for political donors, command-and-control
bureaucracy and handouts to the privileged. If enacted, it will do
little to reduce greenhouse gases, while discrediting the notion of
climate change legislation.”
), but they nevertheless concluded that:

until Exxon starts lobbying (read: throwing lots of dollars around) for
a viable carbon tax, it will be tough to believe that the company wants
climate change legislation of any sort.

Even while dismaying, I suppose it`s a fair point. Not merely Exxon, but others who want an effective, affordable and politically sustainable climate policy, as well as those who are simply opposed to the massive and opaque pork-barrel approach that Congress is now brewing up (in part for a new set of special interests to edge coal aside from the public troughs), are going to have to start speaking up.

—–

By the way, Tillerson`s speech is a good read; I copy below his remarks about climate policy (emphasis added):

Principles of Policymaking
Climate change policy is one example where such an approach is needed. 

As
Congress debates important legislation for addressing the risks of
climate change, we must remember the fundamental realities governing
the energy system, the need for and pace of technological change, and
the role of stable policies to help encourage innovation, investment,
and collaboration
.

When it comes to managing the risks of climate
change, in my view, the most effective policy approaches must be guided
by several key principles.

First, a successful carbon-reduction
policy needs to establish a uniform and predictable cost for emissions
for use in all economic decisions.  This will ensure government is not
put in the position of arbitrarily picking winners and losers

Second,
the best way to ensure that carbon costs are minimized is to allow for
markets to select the best methods to reduce emissions through new
investments and technology
.

Third, we should seek to minimize
administrative complexity.
  Our shared goal is to reduce emissions at
the lowest cost to society.

To do that we must keep
administrative costs low
so that market participants can invest in
technologies that actually reduce emissions — not become bogged down in
bureaucratic demands or incur the costs of financially burdensome
regulatory systems.
 

Fourth, we should seek to maximize cost
transparency.
  By providing this transparency, companies and consumers
can
assess costs for themselves within the context of different public
policy options, as well as assess those costs in light of their own
needs and resources, allowing them to make the best decisions possible.

Fifth,
our national policy approach should encourage global participation
Energy is critical to progress and economic opportunity in both
developed and developing countries.  Thus, for long-term emissions
reductions to succeed, every nation must be involved.  Developed
nations cannot do it alone.  Developing nations cannot be expected to
forgo economic growth and advancement.  Thus, any carbon-reduction
policy must take these realities into account and encourage every
nation to participate in the most appropriate way to meet our shared
goals for reducing emissions globally.

And of course, there will
need to be periodic reviews and assessments to ensure that we can adapt
to any changes in climate science that might emerge or to respond to
any adverse impact these policies might be having on economic
performance.

Shortcomings of Cap and Trade
So how does the current proposal before Congress to reduce carbon
emissions measure up against these principles for effective
policymaking?  Will a cap-and-trade system accomplish our society’s
shared goals?

Unfortunately,
experience indicates that a cap-and-trade system will result in
volatile prices for emissions allowances — and this volatility will
carry a heavy cost for both the economy and the environment.  For
businesses and industry, price volatility undermines the ability to
invest in advanced technologies.  Price volatility also creates
economic inefficiencies and invites manipulation in the markets
for
allowances.  

For businesses and entrepreneurs, the added
complexity and lack of a predictable cost for emissions make it
difficult to plan
— especially over the long-term. 

And as we discussed earlier, steady and disciplined investment is needed to develop and deploy new technologies.

We
are not alone in this assessment.  The Congressional Budget Office
studied cap and trade and concluded, I quote: “Volatile allowance
prices could have disruptive effects on markets for energy and
energy-intensive goods and services and make investment planning
difficult.” 

Cap-and-trade schemes create another potential cost:
opportunities for market manipulation.  Yet, even with regulations
aimed at minimizing the potential for market manipulation, the
volatility inherent in a cap-and-trade system will add to consumer
concerns about energy prices and the consumer’s ability to manage
energy-related expenditures.

Benefits of a Carbon Tax
These costs and consequences inherent to cap-and-trade schemes have led
many policy experts and economists to prefer another course of action
to reduce greenhouse gas emissions.  That other option is a
revenue-neutral carbon tax.
  I know that’s hard for a politician to
say, so we have given it a new name.  We call it a “refundable
greenhouse gas emissions fee.”

As
a businessman, I have to take a deep breath every time I speak about
this, because it’s hard for me to speak favorably about any new tax.  I
hope you see it shows how serious we are about this issue. 
A
revenue-neutral carbon tax has the advantage of being well focused for
achieving our society’s shared goal of reducing emissions over the long
term.  It can be predictable, transparent, and comparatively simple to
understand and implement. 

A carbon tax can create a clear and
uniform cost for emissions in all economic decisions.
  This encourages
every business, every industry, and every consumer to become more
efficient and do their part
to increase efficiency and reduce emissions
through other choices they might make.  Because a carbon tax is
directly applied to the carbon content of fossil fuels or to other
greenhouse gas emissions, there is no need for a government to pick
winners and losers in industry through complex allowance allocation
processes
as we have witnessed on the Hill of late.

By
eliminating price volatility, a carbon tax provides predictability. 
And predictability allows entrepreneurs and businesses to plan over the
long term
to research emerging technologies and develop the integrated
solutions that have the most positive impact. 

A carbon tax also
avoids the costs and complexity of having to build a new market for
emissions allowances or the necessity of adding a new layer of
regulators and administrators to police this market.  And a simple
carbon tax can be more easily implemented.  It could largely be built
on the existing tax infrastructure. 
We pay a lot of taxes, excise
taxes, federal taxes.  We’ll just add this to the list.

There is
another advantage: A revenue-neutral carbon tax can ensure that
government policy is specifically focused on reducing emissions, not on
becoming a revenue stream for other purposes.  In other words, the size
of government need not increase due to the imposition of a carbon tax
to solve a threat to society.
 

By returning the tax revenue back
to consumers through reductions in other taxes — payroll taxes or a
simple dividend — we can reduce the burden on the economy and on our
most vulnerable citizens
.  In this current economic downturn, American
families and businesses can hardly afford to be paying a higher cost
for energy, so a direct and transparent refund mechanism is a political
imperative.   

Finally, there is another potential advantage to
the tax approach.  A carbon tax may be a more viable framework for
engaging participation by other nations.  A tax framework is easier to
implement and it does not cap economic growth. 

In addition, it
can be easily adapted to reflect the circumstances of each country. 
Given the global nature of the greenhouse gas challenge, and the fact
that the economic growth in developing economies will account for a
significant portion of future greenhouse-gas emissions, policy options
must be flexible in order to encourage global engagement. 

Now,
some people have suggested that a revenue-neutral carbon tax has no
chance of gaining sufficient support in Congress to become law.  They
say a carbon tax is too politically sensitive and that it is easier and
more politically expedient to support a cap-and-trade approach, because
the public will never figure out where it is hitting them.  They will
just know they hurt somewhere in their pocketbook.

I disagree
with this assessment.  I believe the American people want climate
policy to be transparent, honest, and effective.  Economists generally
agree that achieving a given emissions target costs less under a tax or
fee approach than under a cap-and-trade system.  I firmly believe it is
not too late for Congress to consider a carbon tax as the better policy
approach for addressing the risks of climate change.
 Indeed, there has
never been a more opportune time for Congress to pursue this course of
action. 

Call to Action
During this time of
economic challenge, we must remember that our nation’s economic growth
and success are built on the innovation, energy, and ingenuity of the
American people.  In the months ahead, our nation will make many
important decisions about the direction of our energy policies.

The
U.S. oil and gas industry, and I certainly can commit ExxonMobil, is
committed to working with government leaders to help reenergize the
economy, create new jobs, protect the environment, and strengthen
America’s energy security.  We’re going to continue to do our part to
achieve all these shared goals by investing in and developing
integrated, technology-based solutions to our nation’s economic and
environmental challenges even in the face of an economic down cycle. 
And I’m confident, with sound and stable public policies in place, that
these investments hold the promise for a brighter future for not just
all Americans, but for the entire global community as well.

 

[To comment, please visit this post at my main blog at the Ludwig von Mises Institute.]

Margo Thorning / ACCF to WVa. Conservative Foundation: we need a carbon tax and other policies to reduce greenhouse gas emissions

August 28th, 2009 No comments

Margo Thorning, Chief Economist and SVP at the influential American Council for Capital Formation (and director of research for its tax and environmental policy think tank (ACCF Center for
Policy Research) and managing director of its new international affiliate, the International Council for Capital Formation) has been a persistent and vocal long-term opponent of most climate change policy, so much so that she`s got her own “ExxonSecrets FactSheet” (alongside similar ones for ACCF). 

She`s also the author of widely-quoted studies of the costs of climate change legislation, and has been busy explaining the study jointly released earlier this month by ACCF and the National Association of Manufacturers that assesses the potential impact of the Waxman-Markey Bill on manufacturing, jobs, energy prices and our overall economy,

(The rollout of the study, executive summary, etc. are here; criticisms of the study`s assumption are here, here, here, here, here and here.)

All of which makes her remarks on August 25 at a “Cap and
Trade Town Hall meeting”
sponsored by the West Virginia Conservative Foundation (and reportedly the West Virginia Manufacturers Association as well) – to the effect that we DO need federal and global policies to reduce GHG emissions and to prepare to adapt to changes that we will be unable to forestall – even the more remarkable. 

I quote below from an August 27 report of Thorning`s remarks in the online version of The State Journal (emphasis added):

Thorning believes that climate change is happening, that it is at least
in part caused by human activity and that some type of policy to reduce
greenhouse gas emissions is warranted.


But while climate scientists recommend keeping atmospheric
concentrations of greenhouse gases below 450 parts per million to avoid
the very worst effects of climate change, Thorning said it’s too late
for that.


“We’re probably, because of China and India and developing countries,
going to have to adapt to a higher level of CO2 concentrations in the
atmosphere,” Thorning said in an interview before the event. “We might
be able to keep it to 550, but I think we better focus on adapting to a
changing environment.”

There is no rush in Thorning’s mind.


“CO2 stays in the atmosphere 100 years,” she said. “I think we can afford to take a thoughtful approach.”

Congress currently is considering a cap-and-trade program that would
place a cap on carbon emissions, issue permits that companies could
trade in an emissions market and then ratchet the cap down over time to
ensure emissions reductions.


Rather than a cap-and-trade program, Thorning advocates a carbon tax
that would put a price directly on greenhouse gas emissions and would
rise over time.

Now this might have startled her audience and readers here, but close observers might have noted that Thorning made a similar statement two years ago when, as I previously reported, she said in an interview that “Senator Lieberman and Warner are to be commended for their
efforts to reduce greenhouse gas emissions, because I think we’re all
united that that’s a goal we need to put a lot of resources into.

Thorning spoke further in West Virginia about why a carbon tax is preferable to cap and trade:

In general, economists say, a cap on greenhouse gas emissions gives
certainty about emissions but uncertainty about the price of emissions,
while a tax on the emissions gives certainty about the price but not
about the quantity.


Companies need that price certainty, Thorning said, so they can make investment decisions.

A study sponsored in part by the ACCF and released earlier this month
found that the program Congress is considering could reduce U.S. Gross
Domestic Product between 1.8 and 2.4 percent from a baseline projection
in 2030.

It did not compare the effects of a carbon tax.

Thorning also spoke of the need for revenue.

President Barack Obama initially planned to auction the cap-and-trade
emissions permits and to direct some of the proceeds to the development
of renewable energy sources and carbon capture and storage technology.

However, as the program has come to be structured, the permits would be
given for free to emitters in at least the first decade of the program.

A tax, Thorning said, would bring in those revenues and enable the
government to support the development and deployment of important
technologies.

From a broader perspective, Thorning underlined the growth of emissions
in China, India and other emerging economies. She champions the
exchange in both directions of the most effective technologies to
reduce greenhouse gas intensiveness.


She pointed to the Major Economies Initiative housed in the U.S.
Department of State to foster cooperation among 17 countries that
represent 85 percent of greenhouse gas emissions.


The initiative can help promote business-to-business transactions like
one in which Caterpillar Inc. is turning methane captured at 60 Chinese
coal mines into electricity,
she said.

“So Caterpillar is making money on that, and we’re suppressing a gas
that’s even more harmful than CO2 — and the Chinese are getting
electricity,” she said. “There are about eight key areas like that that
have been identified in this Major Economies Initiative.”

Thorning believes that a gradually increasing U.S. carbon tax combined
with international cooperation on best practices is the least
economically disruptive approach to reducing greenhouse gas emissions
over time.


“Remember that economic growth and stronger economies allow people to
adapt to a changing environment,”
she said. “We have to keep our eye on
the bigger picture.”

h/t http://www.carbontax.org/

What else does Thorning want to see done on climate policy?  In a presentation in June to the Midwest Energy and Climate Policy Conference in St. Louis, Thorning argued that practical strategies for reducing global greenhouse growth would include the following steps:

  • Use cost / benefit analysis before adopting policies
  • If U.S. puts a price on carbon emissions, a carbon tax is preferable to cap and trade
  • Reduce cost of U.S. energy investment through tax code improvement and incentives for non profits
  • Remove barriers to developing world’s access to more energy and
    cleaner technology by promoting economic freedom and market reforms
  • Increase R&D  for new technologies to reduce energy intensity, capture and store carbon, and develop new energy sources 
  • Promote nuclear power for electricity
  • Promote truly global solutions and consider expanding the Asia
    Pacific Partnership on Development with its focus on economic growth
    and technology transfer to other major emitters

These prescriptions expand on her November 2007 interview:

Q:So, if you were given the opportunity
to sort of write your own proposal of how the U.S. should reduce
emissions and not hurt itself economically, you’d go with the carbon
tax?

Margo Thorning: I would go with the
carbon tax and more incentives for new technology development. And I
would change the U.S. tax code, because we have the slowest
depreciation allowances for new energy investment of 12 countries that
we compared recently. We have very high capital costs for new
investment because depreciation is so slow and our effective tax rate
is very high, because our corporate tax rate is the highest in the
industrial world. So our companies are disadvantaged vis-à-vis our
trading partners because of our tax system.

This would seem to align Thorning`s views fairly closely with those of the still-villified Exxon, which has been a generous supporter of ACCF, and whose CEO Rex Tillerson is an express advocate of carbon taxes.  The nail-biting question is whether these voices are too little and too late in the game to steer the cap and trade pork train on to a more productive track.

Categories: ACCF, carbon pricing, Exxon, Thorning, Tillerson Tags:

Atlas Does Not Shrug at Climate Change: Exxon, Rob Bradley's favorite "principled entrepreneur", embarks on $600+ million biofuels venture

July 15th, 2009 No comments

A little birdy told me this story yesterday, which I think I was the first to ”Tweet”.

ExxonMobil has announced a $600+ million venture with Craig Venter’s advance genomics firm to develop fuels from algae.  An Exxon scientist noted:

“the potential advantages and benefits of biofuel from algae could be significant. Among other advantages, readily available sunlight and carbon dioxide used to grow the photosynthetic algae could provide greenhouse gas mitigation benefits. Growing algae does not rely on fresh water and arable land otherwise used for food production. And lastly, algae have the potential to produce large volumes of oils that can be processed in existing refineries to manufacture fuels that are compatible with existing transportation technology and infrastructure.” “

Exxon, whose scientists contributed directly to the Intergovernmental Panel on Climate Change, has made a steady stream of policy announcements and investments related to climate change over the past five years, and Exxon CEO Rex Tillerson has specifically called for governments to establish regulatory frameworks that provide investors and consumers with incentives to find ways to reduce GHG emissions, with Exxon favoring carbon taxes over cap-and-trade policies.  (Tillerson has said: “It is rare that a business lends its support to new taxes. But in this case, given the risk-management challenges we face and the alternatives under consideration, it is my judgment that a carbon tax is the best course of public policy action. And it is a judgment I hope others in the business community and beyond will come to share.”)

A recent statement by Exxon explained its climate change views as follows:

“As was recently summarized in the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), the risks to society and ecosystems from increasing greenhouse gas (GHG) emissions are significant. Meeting the enormous energy demand growth and managing the risk of GHG emissions are the twin challenges of our time.We all must engage in the search for solutions if we are to succeed at mitigating these risks. Progress can be achieved through climate change policy frameworks that enable countries to pursue economic progress while promoting the development of technologies necessary to generate and use energy more efficiently. As the largest publicly traded international energy company, the energy ExxonMobil produces meets 2 percent of the world’s needs. We share the responsibility to take action with scientists, citizens, and governments around the world and are doing so in several substantive ways.”

(emphasis added)

 

As an aside, I note that despite Rob Bradley’s deep admiration for Exxon (including several posts noting Exxon`s reluctance to invest in “green” energy), Exxon has specifically stopped funding Rob Bradley‘s Institute for Energy Research and similar public policy research groups, on the grounds that these groups’ “position on climate change could divert attention from the important discussion about how the world will secure the energy required for economic growth in an environmentally responsible manner.”  Does Exxon, despite an apparently strong policy disagreement with Bradley, still have his respect?

 

 

Categories: climate change, Exxon, Rob Bradley, Tillerson Tags:

[Fixed] Exxon/Rex Tillerson: No longer willing to be "conservative" on climate risks, advocates carbon taxes and invests in carbon-lite tech

March 7th, 2009 No comments

[Somehow
most of my excerpts of Tillerson`s speech weren`t included in my first try; there`re here
this time.]

It may still seem novel to some, but Exxon
Mobil Corporation
began throwing its weight behind carbon pricing
policies
more
than two years ago

Subsequently, Rex
Tillerson,
Exxon`s Chairman and CEO, has
given
a
number of speeches
on
Exxon`s actions (and cost savings) in reducing its own GHG emissions, its
investments in energy technologies that further improve energy efficiency and
GHG efficiency, and Exxon`s views on climate risks and preferred policy
options.  Why is this worth mentioning?  Simply, Exxon is an
excellent, well-run company that knows the energy business and climate risks
well (its scientists have been sitting on the IPCC panels fromtheir inception),
so it has some credibility (in this vein, Rob Bradley`s MasterResource
“free-market” energy blog has a post up toda,
similarly remarking on Exxon`s credibility
as well-run, principled and
“the consumer’s friend and the taxpayer’s friend;” Rob just
conveniently fails to mention Exxon`s pro carbon-tax stance).

Tillerson made another such speech on February 17, on the occasion
of a visit to the Stanford
University
-centered
Global
Climate and Energy Project (GCEP)
, the world`s largest privately-funded
effort to conduct basic research on energy technologies that will further
reduce GHG emissions.  Exxon has has committed $100 million to
GCEP over ten years and has been the lead funder of GCEP since its
establishment in December 2002.  The punchline of Tillerson’s remarks?

“It
is rare that a business lends its support to new taxes. But in this
case, given the risk-management challenges we face and the alternatives
under consideration, it is my judgment that a carbon tax is the best
course of public policy action. And it is a judgment I hope others in
the business community and beyond will come to share.”

Tillerson`s
full speech here
is worth a look; I excerpt a few portions below – climate
policy comments are largely at the end (emphasis added):

GCEP’s research program, like ExxonMobil’s, is shaped to fit the contours of what has been termed the “grand challenge” before us. It is, in fact, a dual challenge — supplying the energy essential to global economic growth, while at the same time reducing greenhouse gas emissions and managing the risks of climate change. …


However, the world economy will recover. History shows that human ingenuity and productivity cannot long be suppressed. And when the world economy recovers, so will world energy demand.


Growing populations in developing countries who are seeking higher standards of living will drive this increased energy demand, which is expected to be 35 percent higher in the year 2030 than it was in the year 2005, despite the current and temporary economic conditions.


Meeting this growing long-term societal demand requires that we develop all economic and environmentally sound sources of energy. This includes hydrocarbon energy sources like oil and natural gas, which are abundant, available, versatile and affordable.


Huge investments over many decades have enabled oil and natural gas to meet close to 60 percent of the world’s enormous energy needs today, and projections are that oil and natural gas will account for a majority of the world energy demand through at least the year 2030. They are simply indispensable and irreplaceable at scale.


This global energy demand challenge is matched by a global environmental challenge — curbing greenhouse-gas emissions and addressing the risks of climate change. Thanks to greater energy efficiency and growing use of cleaner energy such as natural gas for power generation, greenhouse-gas emissions levels are expected to decline in some developed economies. …


The challenge for developing economies is more daunting, where energy demand is increasing as growing populations strive for higher standards of living. For example, by the year 2030, China’s carbon-dioxide emissions will be comparable to those of the United States and Europe combined — even recognizing that China’s energy use and emissions will be much lower on a per-capita basis — rising from 4 metric tons per capita in 2005 to 5.8 metric tons per capita in 2030.


Nonetheless, the net effect of these countervailing trends will be a sizeable increase in greenhouse-gas emissions worldwide. Even with dramatic gains in efficiency, rising demand for energy will continue to push related carbon-dioxide emissions higher through the year 2030 — an increase of 28 percent from the year 2005. …

 

To develop these integrated solutions, we will need to find the best ways to unlock new technology. Energy innovation — led by private enterprise, furthered by independent research, spread by free markets, and supported by sensible and stable public policy — will be essential to enabling us to achieve each of these aims. It is the key to a more prosperous, more secure, and more sustainable energy and environmental future.


It is important to remember, however, that gains in efficiency and technology occur over time.


The most dramatic changes will not happen overnight, due to the sheer complexity of the technologies we develop and the enormous scale of the global energy market. Technological transformation takes time.


The history of energy over the last century helps put such transformation into perspective. For example, it is estimated that at the beginning of the 20th century, coal and wood provided more than 95 percent of the world’s energy needs. From that point, it took more than half a century for petroleum — a cleaner and more versatile alternative — to surpass coal as the world’s largest energy source. It took nearly 50 years more to develop the technologies and build the global infrastructure so that natural gas, an even cleaner-burning source, could play a sizable role in the world’s energy mix.


This reality about timeframes is another reason why we need energy policies that allow for long-term planning and consistent, disciplined investments that lead to technological advances.


National and state governments can play a helpful role in this vital enterprise.


By creating a stable, long-term policy framework for investment in academic and commercial research efforts, government can be a partner in the short-, medium-, and long-term technological transformations we need.


One of the areas where government can provide needed stability is by implementing simple, transparent, and predictable policies to mitigate greenhouse-gas emissions. Throughout the world, policymakers are considering a variety of legislative and regulatory options. In our view, assessing these policy options requires an understanding of their likely effectiveness, scale and cost, as well as their implications for economic growth and quality of life.


Consistent with that view, we believe that a carbon tax would be a more effective policy option to reduce greenhouse-gas emissions than alternatives such as cap-and-trade. Pricing carbon through a direct and transparent tax could incentivize the search for lower-emissions energy solutions while also providing the stability and predictability industrial companies need to make long-term, capital-intensive investments in equipment and research.


To ensure revenues raised from this tax are indeed directed to investment, and to assist those on lower incomes who spend a higher proportion of their income on energy, a carbon tax should be offset by tax reductions in other areas to become revenue neutral for government.

It is rare that a business lends its support to new taxes. But in this case, given the risk-management challenges we face and the alternatives under consideration, it is my judgment that a carbon tax is the best course of public policy action. And it is a judgment I hope others in the business community and beyond will come to share.

Categories: Bradley, carbon pricing, Exxon, Tillerson Tags: