Oil and gas companies are critical to the climate change fight
The debate over whether coal, oil and natural gas are causing climate change is over.
Fringe diehards may continue to deny the science, but the conversation has moved past them. Human-induced global warming is proven, climate change is demonstrable, and most of the planet’s citizens want to slow it down.
Finally, U.S. oil and gas companies are in the fight with concrete proposals. Between the Oil and Gas Climate Initiative and the Climate Leadership Council, every major energy company has committed to reducing greenhouse gas emissions and developing technologies to slow climate change.
Many of these proposals are self-serving, but that is no reason to ridicule them. A corporation’s mission is to make a profit, and a lot of companies will make a lot of money reducing greenhouse gases.
Activists and policymakers must accept that energy companies are part of the solution, even if they contribute to climate change in the time being.
Globally, 34 percent of our energy comes from oil, 27 percent from coal, 24 percent from natural gas, 7 percent from hydroelectric, 4 percent from nuclear power, and 4 percent from renewable energy. No serious person working in the energy industry believes we can eliminate fossil fuel use by 2050, let alone 2030.
We need the companies responsible for 58 percent of our energy to keep operating. The best way to convince these companies to speed the energy transformation is to allow them to make a profit.
The Climate Leadership Council, the more broad-based of the two organizations, was founded by Houston’s James Baker and George Schultz, Reagan administration alums. Founding members include General Motors, Johnson & Johnson, Proctor and Gamble, Exxon Mobil and ConocoPhillips.
Dozens of companies and economists of every stripe have joined the council in asking the federal government to impose a carbon tax. The severance tax would begin at $40 a ton and rise 5 percent a year until emissions are cut in half in 2035 from 2005 levels.
The tax would also apply to imported fossil fuels, and the United States would lobby all governments to levy similar taxes.
Supporters know that higher
A ship arrives at a ferry terminal in New York for a tour of Equinor’s wind farm project.
energy costs from the tax will hurt the average American, so they want the proceeds refunded to taxpayers, totaling about $2,000 a year for a family of four. Economists know that most consumers, when faced with higher energy prices, will reduce their energy consumption and spend the rebate on other things. The result is a zero-cost shift in behavior.
In return for the tax, the federal government would stop trying to reduce emissions through regulation. That would give companies seeking to reduce tax obligations room to innovate solutions rather than game the IRS.
Major oil companies want this plan because it is simple, and conservatives like it because the revenues are returned to the taxpayer. Environmentalists, including The Nature Conservancy and World Resources Institute, approve of the polluter-pays principle.
The Oil and Gas Climate Initiative has a much narrower membership than the Climate Leadership Council, but includes many of the biggest oil companies, including Exxon Mobil, Chevron, Occidental Petroleum, BP, Royal Dutch Shell, Saudi Aramco, and China’s CNPC. But the group is no less committed to minimizing climate change.
The initiative hosted meetings at U.N. Climate Week last month and focused on trapping carbon, not just keeping it in the ground. Known as carbon capture, utilization and storage, this emerging industry is necessary to prevent the worst global warming while the world transitions to more renewable energy.
Oil and gas companies have a lot of experience with underground reservoirs. The industry often stores oil and natural gas in caverns until it is needed. Oil companies also pump carbon dioxide into some wells to produce more oil, leaving most of the gas underground in the empty spaces.
Members of the initiative see carbon capture as a potentially lucrative business. If companies are taxed for every ton of carbon they produce, it only makes sense that companies should get a tax credit for putting it back in the ground. Theoretically, the world could use carbon-based fuels for eternity, if we sequestered an amount equivalent to what we produce.
About 25 carbon capture projects are currently operating, and Occidental says it will soon capture carbon directly from the air and pump it into Permian Basin wells. But the industry calculates that carbon capture needs to ramp up 2,500 percent by 2030 to meet climate goals, and members want some tax breaks now.
I have criticized U.S. energy companies for dragging their feet in the fight against climate change, and I still wish they’d do more. But we should encourage them to change, not make them an enemy.
The climate crisis is bigger than most people realize, and we need all the help we can get to preserve our way of life.