Debate focuses on carbon tax
A carbon tax or cap-and-trade system in the U.S. — and globally — would serve the energy industry better than the current slate of piecemeal state and federal regulations, Shell Oil Co. President Marvin Odum said Tuesday.
He acknowledged that Congress won’t take action soon in gridlocked Washington, but said that people should move beyond sound bites. Odum spoke at the University of Houston’s energy symposium focusing on whether now is the right time for a carbon tax.
He argued for a global approach, be it a carbon tax or a cap-and-trade system, aimed at all industries in an effort to fight against climate change threats.
“I don’t know that I really care which it is. It just has to be a very well-designed system,” Odum said. “I think it’s important to have a level playing field.”
A carbon tax is a set price on carbon emissions. A cap-andtrade system puts a cap on the amount of carbon that can be emitted, but lets companies buy and sell permits to pollute beyond the allowable limits. A federal cap-and-trade proposal passed the then-Democratic controlled U.S. House in 2009 but died in the Senate.
In the spring, the Netherlands-based Royal Dutch Shell joined BP, Eni, Statoil, Total and BG Group as a consortium of European energy giants calling for the United Nations to agree on carbon pricing.
Odum emphasized that Shell isn’t moving away from oil and natural gas. In fact, it is betting big on natural gas, which is cleaner than coal, with its pending acquisition of BG Group. He
noted the global population is growing and many people still lack access to power.
Technology is rapidly advancing to make oil and gas production and power generation cleaner, he said.
“You’re actually going to require a tremendous amount of fossil fuels and hydrocarbons over the next 40 to 50 years,” Odum added.
Odum also noted that Shell objects to a carbon tax if its revenues go straight into governments’ general funds to spend as they wish.
Aparna Mathur, resident scholar in economic policy studies at the American Enterprise Institute think tank, argued at the event for a carbon tax as a part of comprehensive tax reform as the only means of making progress in the U.S. Portions of any federal carbon tax revenues would need to be set aside in advance to offset increased power costs on low-income households, Mathur said, because of a tax’s regressive nature.
Cap-and-trade leads to more price uncertainty, she said.
“It is the most costefficient solution to regulate greenhouse gases,” Mathur said of a carbon tax. “It’s likely to be more transparent.”
Retired energy executive H. Leighton Steward, a board member of Houston’s EOG Resources also participated in the forum. He denies climate change exists and opposes any carbon tax or similar approach.
Kyle Danish, a partner with the Van Ness Feldman law firm who works with industry on environmental matters, argued that a tax or cap-and-trade could work with the right design. Companies might buy in if the resulting revenue was used to lower the corporate income tax, and perhaps if aspects of the new Clean Power Plan that places emissions restrictions on power plants were peeled back.
Odum said the U.S. and Europe cannot just force developing nations to stop using coal. However, a strong coalition can use trade policies and other incentives to push the rest of the world to change.
The UH Energy Symposium Series has for three years served as a gathering place for industry officials and environmental experts to talk about key energy topics.
The symposium Tuesday, attended by 450 people, was the second of four energy forums at UH over the next few months. The focus was Arctic drilling in September.
Two more are set for February and March.
The Houston Chronicle’s energy website, FuelFix.com, is a sponsor of the symposium series.