Editorial Board

Even Big Oil Wants a Carbon Tax

Photographer: Kristian Helgesen/Bloomberg

Now that six of the world's largest oil companies have essentially come out in favor of a carbon tax, it's getting harder to dismiss the idea as some kind of outlandish lefty plot. And those companies can help their cause by engaging Congress directly, instead of outlining their case in a polite letter to the United Nations.

None of the companies -- BP Plc, Royal Dutch Shell Plc, Total SA, Statoil ASA, Eni SpA and BG Group -- is based in the U.S. Still, their argument should resonate in Washington: "Clear, stable, long-term" policies that make carbon more expensive (the letter never uses the word "tax") are necessary to reduce uncertainty, stimulate investment and encourage the most efficient reductions in emissions. Only governments can make those changes, they say. And those national systems must eventually be connected to create a global system.

That's the right approach, and it's not surprising that oil producers are advocating it. The current strategy for reducing emissions of carbon dioxide and other greenhouse gases isn't nearly enough to prevent potentially devastating changes to the Earth's climate. As the need intensifies for a more ambitious response, so does the challenge these companies face in planning for them. And the longer those remedies are delayed, the more aggressive they'll need to be.

There are two broad arguments against pricing carbon. One is that climate change is exaggerated, or at least unproven, so a carbon tax is unnecessary. The second is to concede that climate change is real but that a carbon tax or similar approach would be too disruptive.

In their letter, sent to the head of the UN Framework Convention on Climate Change in advance of its meeting in December, the oil companies reject the first claim outright and answer the second. They also pledge to work for a change in policy "in our meetings with ministers and government representatives."

In other words: Their lobbying will consist of more than a letter-writing campaign, which is hardly news. Shell spent almost $15 million in the 2012 election cycle, according to the Center for Responsive Politics, while BP spent $9 million. If Big Oil wants to change the direction of U.S. climate policy, it's safe to say it can.

One example: There is legislation that would impose a price on carbon starting at $42 per ton. Big Oil could use its clout to advance the bill in Congress and advocate for the idea in the public debate.

It's not as if the opposition to a tax is especially stubborn. A poll last year found that while two-thirds of voters oppose a straight carbon tax, 56 percent approve if its revenue is rebated to the public. And if the money it raised were used to fund research into renewable energy, 60 percent approve -- including a majority of Republicans.

It's becoming increasingly clear that voters and companies alike are ready for a carbon tax. Nobody wins by waiting. 

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.