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The Wall Street Journal reported this morning (paywall) that Exxon, the world’s largest producer of fossil fuels, is actively lobbying for a carbon tax. Yes, you read that right: Exxon is putting its clout behind a tax on the stuff it sells.
Why? Here is how the Journal put it:
A straightforward carbon tax that is revenue-neutral—meaning other taxes should be lowered to offset the impact—is far preferable to the patchwork of current and potential regulations on the state, federal and international levels, according to Exxon spokesman Alan Jeffers.
And that, in one sentence, is why such a tax eventually could win widespread support of the business community—fundamentally changing the politics of carbon taxes.
Such a tax has long been backed by economists across the ideological spectrum and by many activists on the left. But congressional Republicans and much of the U.S. business establishment have steadfastly opposed the idea. Just three weeks ago the House passed a non-binding resolution declaring its opposition to a climate levy.
Exxon has supported a carbon tax for years. But its backing has been passive, as detailed in this nice piece from the newsletter Inside Climate News. For instance, the firm sat on the sidelines before the recent House vote. But the Journal reports the firm has been stepping up its behind-the-scenes activism, not only on Capitol Hill but within the energy industry.
Exxon may have its own competitive reasons for getting behind the tax: It is a major producer of natural gas, a relatively low-carbon alternative to coal. And a carbon tax would boost demand for gas.
But in this case, I suspect the firm means what it says: A single federal carbon tax would be preferable to a patchwork of state regulation and taxes. And a carbon tax could generate revenue that could help buy down other taxes, such as the corporate income tax. My Tax Policy Center colleagues Donald Marron and Eric Toder explain how in this 2013 paper. One day, those arguments could reshuffle the political deck for what, until now, has been considered a lost cause.
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In this April 16, 2010 file photo, steam rises from towers at an Exxon Mobil refinery in Baytown, Texas. Exxon says the energy renaissance in the U.S. will continue and predicts that North America will become a net exporter of oil and gas by the middle of the next decade. The oil and gas giant’s latest long-term energy outlook, released Tuesday, Dec. 11, 2012, says the rapid growth of production in the U.S., Canada along with improved energy efficiency will lead to more oil and gas being sent overseas. (AP Photo/Pat Sullivan. File)