Photo via Cleveland
Exxon, the largest oil company in the world has stated that it prefers a carbon tax to a cap and trade system--again--this time, specifically in Australia. This comes on the heels of news last week that Australia's parliament rejected a cap and trade system for curbing emissions--there won't be another vote on the bill for at least 3 months. So what's behind Exxon's vocal pro-carbon tax stance?
"A carbon tax is more transparent to consumers, will achieve greater environmental benefits and is more difficult to manipulate than a cap-and-trade program," John Dashwood, chairman of Exxon's Australian unit, said in speech notes e- mailed ahead of an address today in Melbourne.A little puzzling is the fact that Australia's proposed carbon cap featured relatively low emission reduction targets--as low as 5% reduction from 2000 levels by 2020. Hardly a demanding commitment, at least in the short term (this is why many members of Australia's own Green party voted against the cap and trade themselves--it wasn't strict enough).
Nonetheless, some economists, along with experts like James Hansen and Al Gore, prefer the carbon tax option. Throw in Exxon Mobil, and you've got yourself an eclectic band of misfits. Economists (and presumably Exxon) argue that the tax is a more efficient and inexpensive way to curb carbon. From Bloomberg:
Imposing a global carbon tax would ease pressure on the climate more cheaply than emissions trading, according to a study released last week by Danish professor Bjoern Lomborg. A $0.50 tax for each ton of emissions may generate $1.51 in avoided climate damage, compared with costs as high as $68 per ton, resulting in 2 cents of avoided damage, under some emissions-mitigations models, the study said.Another possible reason for Exxon's sudden support could be good old fashioned political gamesmanship--the idea of a carbon tax is potentially extremely unpopular (as is anything that includes the word "tax" in its moniker). If the company has reason to believe a carbon tax is very unlikely to actually pass Australian parliament, it can voice support for it and appear environmentally inclined without having to make any actual adjustments. However, Exxon makes for a powerful voice of support, and having the oil giant in favor could draw other businesses', politicians', and citizen support for a carbon tax, which could eventually create stricter regulations on the oil giant than a cap would.