API Advocates Carbon Pricing To Address Growing Climate Concerns
The carbon tax endorsement was just one part of a broader plan the group said will be required to combat climate change.
The American Petroleum Institute (API) has emerged in favor of legislation that prices carbon across all economic sectors ahead of the new US administration’s plans to curb greenhouse-gas emissions and transition to cleaner energy sources. The oil and gas industry’s largest trade group released a policy framework aimed at addressing the risks of climate change while meeting the world’s long-term energy needs. API had historically been a staunch opponent of a carbon tax.
The carbon tax endorsement was just one part of a broader plan API said will be required to combat climate change. The lobby group added that it advocates accelerating technology and innovation, further mitigating emissions from operations, advancing cleaner fuels, and driving climate reporting.
Carbon price backing signals a shift for the oil industry, but that support is contingent on the policy being applied economywide and avoiding regulatory duplication. It also implies the industry lobby is in favor of additional costs over additional regulations.
“Confronting the challenge of climate change and building a lower-carbon future will require a combination of government policies, industry initiatives, and continuous innovation,” said Mike Sommers, API president and chief executive. “America has made significant progress in reducing emissions to generational lows, but there’s more work to do. As our industry accelerates efforts to advance groundbreaking technologies, reduce emissions, and drive transparent and consistent climate reporting, we urge lawmakers to support market-based policies that foster innovation, including carbon pricing.”
The oil industry has faced growing pressure by investors to quantify its contribution to climate change, while the Biden administration aims for net-zero emissions over the next 30 years.
Experts estimate that a carbon tax of $50 per metric ton, with an annual growth rate of 5%, could generate $1.87 trillion in additional federal revenue in a decade’s time.
Earlier in the week, National Climate Advisor Gina McCarthy convened a meeting with oil and gas company leadership to discuss shared priorities around addressing the climate crisis. She echoed President Biden’s commitment to bringing the voices and perspectives of all stakeholders to the table when tackling climate change. Topics ranged from addressing the climate crisis and reducing emissions while supporting local economies and job creation.
In recent months, oil companies began leaving trade organizations they felt were not aligned with their changing views on climate policy. BP, Total, Equinor, and Shell all withdrew from a handful of trade associations. In the case of Total, it said in January it would not be renewing its membership with API.