Many of the world’s largest fossil-fuel companies have joined the growing chorus advocating for a carbon tax — while at the same time planning to increase their oil & gas production over the coming decade.
Clearly, they believe that the carbon price will not be high enough to push oil and gas out of the market by 2030, that demand for their products will remain high, and, ultimately, that their fossil-fuel expansion plans will remain profitable.
And if Big Oil succeeds in profiting from its increased oil & gas production — with all the resulting millions of tonnes of greenhouse gas emissions — then carbon pricing will have failed.
It also seems likely that they will seek to use their influence over politicians to ensure this happens — or they risk losing billions of dollars. A new report by Greenpeace and others reveals that Big Oil’s €250m-plus spend on lobbying EU institutions between 2010 and 2018 succeeded in watering down the EU’s 2030 climate targets.
Shell, which regularly touts its green-energy credentials, is planning to increase its crude-oil production by more than half by 2030 and its gas production by more than a quarter, according to Norwegian consultancy Rystad Energy.
“Despite what a lot of activists say, it is entirely legitimate to invest in oil and gas because the world demands it,” chief executive Ben van Beurden told Reuters in October. “We have no choice.”
Similarly, ExxonMobil aims to increase oil & gas production over the next decade by 25%, BP by 20.1% and Total by 12% (with the latter denying any blame for greenhouse gas emissions by claiming it has no responsibility for how its customers use its products).
These four companies — along with ConocoPhillips, the world's largest independent pure-play exploration and production oil & gas company — are supporting the carbon plans laid out by the right-leaning Climate Leadership Council (CLC) lobby group, which advocates for an initial carbon fee of $40 per tonne in the US that will increase every year by 5% above inflation, as well as a fee-and-dividend approach and carbon border taxes.
It seems contradictory that they would support such a scheme while at the same time planning to significantly increase their oil output. So why would they do so?
“It prevents other things that they think would be worse for their business model,” said Joseph Majkut, director of climate policy at non-partisan US think-tank the Niskanen Center.
One of these “things” is a ban on petrol and diesel cars and vans, which is already being imposed in countries such as the UK and France.
The CLC carbon plan also calls for an end to all other “stationary source carbon regulations”, and an end of subsidies for renewable energy.
A carbon tax alone would inevitably result in cleaner and more efficient internal-combustion-engine (ICE) vehicles, not an end to them, whereas a ban on ICEs creates an existential crisis for Big Oil companies.
Big Oil also favours a carbon tax because it would more heavily penalise coal — which is three times more carbon-intensive than natural gas — and thus enable gas-fired power to replace the dirtier fuel.
This article has been corrected to remove reference to the CLC's now-withdrawn policy of protecting oil companies from liability from past emissions.