American Petroleum Institute endorses carbon pricing as oil and gas industry faces pressure on emissions

The oil and gas industry’s largest commerce group Thursday endorsed a worth on planet-warming carbon emissions, marking a significant shift after it lengthy resisted regulatory motion on climate change.

The American Petroleum Institute’s transfer comes as President Joe Biden prepares to unveil a sweeping infrastructure proposal targeted on curbing greenhouse gas emissions and transitioning to wash power.

In a virtual meeting with White House officials Monday, industry leaders from firms such as ExxonMobil, BP, Chevron and ConocoPhillips, together with API, additionally signaled help for market-based carbon pricing.

The endorsement represents a significant shift within the industry’s technique on the difficulty of local weather change and a recognition of the brand new administration’s regulation measures following former President Donald Trump‘s deregulation efforts geared toward serving to U.S. producers.

For occasion, Biden in January issued an executive order to halt new oil and gas leasing on federal lands, a transfer that confronted resistance from producers and a slew of Republican-led states.

The API’s endorsement additionally indicators that the industry — which emits a substantial amount of methane, a greenhouse gas that’s 84 instances stronger than carbon dioxide — would like a quantifiable price related to local weather coverage fairly than ongoing laws.

The industry’s plan got here collectively over the past 18 months and consists of advocating for federal funding for superior applied sciences, additional mitigating emissions from operations, advancing cleaner fuels and growing transparency by increasing using ESG reporting steerage.

The API was a staunch opponent of a carbon tax when Congress final debated the difficulty almost a decade in the past.

“The world has modified since Congress has had this debate,” mentioned API President and CEO Mike Sommers.

The industry has confronted rising pressure by traders to measure its contribution to local weather change. And the Biden administration has vowed to place the U.S. on a path towards net-zero emissions by 2050.

While Democrats are nonetheless working on the small print of the upcoming infrastructure proposal, it is anticipated to price between $2 trillion and $three trillion and embrace $400 billion in funding for clear power and innovation.

A carbon tax may additionally produce funding to assist pay for the infrastructure plan. The Tax Foundation estimates {that a} tax on carbon emissions at a charge of $50 per metric ton, with an annual progress charge of 5%, may generate $1.87 trillion in extra federal income over 10 years.

The API mentioned it will not help a tax that may fund different packages.

“To the extent {that a} new carbon tax can be put into place to fund X program … that is not what we’re speaking about, and that is not what we’d help,” Sommers mentioned. He added that the industry envisions modifications to present laws following a carbon worth coverage endorsement.

Some environmental teams see it as an industry ploy to supply an answer to the carbon drawback and keep engaged within the debate.

David Doniger, local weather and clear power program director on the Natural Resources Defense Council, mentioned the transfer reminds him of the maxim that it is higher to be on the desk than on the menu.

“This is an effort to get to the desk, fairly than be neglected and run roughshod, however it’s not very particular but. I do not know what they’re providing to actually help,” Doniger mentioned.

The NRDC additionally mentioned it opposes eradicating robust air pollution or effectivity laws in change for a worth on carbon.

“That’s just like the previous Wimpy with the hamburgers: I’ll gladly have a hamburger immediately and pay you again subsequent Tuesday,” Doniger mentioned. “We’re not inquisitive about buying and selling a number of of the present instruments.”