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Top oil and gas lobbying group close to backing a carbon tax


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The draft statement, first reported by The Wall Street Journal, says that “API supports economy-wide carbon pricing as the primary government climate policy instrument to reduce CO2 emissions while helping keep energy affordable, instead of mandates or prescriptive regulatory action.”

Coming up with the right language is key for API’s nearly 600 members at a time when President Biden wants urgent action in the fight against climate change. His administration is looking at measures that would slash fuel consumption, clamp down on methane emissions, make buildings more efficient, and limit drilling on federal lands.

API’s president Mike Sommers is eager to be part of those discussions, especially to prevent limits on drilling, moderate regulations on methane emissions and influence the terms of the climate plans required by all signatories to the Paris climate accord, which the United States just rejoined.

Environment and climate groups doubt that the draft endorsement was significant. Maya Golden-Krasner, deputy director of the Center for Biological Diversity’s Climate Law Institute, said “the API’s move would be little more than a public relations ploy, and the Biden administration shouldn’t be taking policy cues from the standard polluters’ playbook.”

Golden-Krasner said that a “instead of letting producers buy their way out of climate accountability, we need strong regulations to keep fossil fuels in the ground.”

Some members of API favor bolder movement on climate change.

“It’s encouraging that API is moving in this direction,” said one member of the group, who spoke on the condition of anonymity to protect business relationships. “But the rubber hits the road when there’s policy. It’s the right direction if you want to see API engage in the right way with the administration and be part of these discussions. The question is how will this be applied to actual policy proposals.”

API can resolve the internal rift between its members by exerting bolder leadership, said Jason Bordoff, director of Columbia University’s Center on Global Energy Policy. “With several large oil companies supporting a carbon price but many others still badly lagging on the climate issue, API needs to step up its support more broadly for climate action or risk breaking apart,” Bordoff said in an email.

A carbon tax would provide a financial incentive for industries to reduce the amount of carbon dioxide, methane and other greenhouse gases they emit. Its advantage is that it is predictable; the disadvantage is that the price might not be high enough to act as a disincentive.

A tax of $40 a ton, advocated by many policymakers, would translate into 36 cents a gallon.

The Biden administration has decided to use a figure of $51 a ton to guide its internal decisions, a rate more than seven times as high as that used by the Trump administration. The price, known as the social cost of carbon, will be incorporated into decisions across the federal government, affecting everything from new coal leasing on federal land to what sort of…

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