Oil trading group must endorse carbon prices

WASHINGTON – The oil industry’s leading lobby group is gearing up to endorse setting a price for carbon emissions in what would be the strongest sign that oil and gas producers are ready to accept government efforts to tackle climate change.

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The American Petroleum Institute, one of Washington’s most powerful trade associations, is about to embrace putting a price on carbon emissions as a policy that “would lead to the most economical ways to achieve the Paris Agreement’s ambitions,” according to a draft statement revised by The Wall Street Journal.

“The API supports carbon pricing across the economy as the government’s primary climate policy instrument to reduce CO2 emissions while helping to keep energy accessible, rather than prescriptive regulatory mandates or actions,” says the draft declaration.

The API executive committee was scheduled to discuss the proposed statement this week. In a statement to the Journal, senior vice president of communications for API, Megan Bloomgren, said the group’s efforts “are focused on supporting a new US contribution to the global Paris agreement”.

Carbon pricing aims to discourage the production of harmful greenhouse gases by setting a price on emissions. The draft API declaration would endorse the concept in principle, without supporting a specific pricing scheme, such as a carbon tax.

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An endorsement of carbon pricing by the oil industry’s most important trading group would highlight the political changes of climate change, as large business groups recognize the dangers posed by greenhouse gases and adjust to a new reality in Washington. Another large business group, the Business Roundtable, endorsed carbon pricing last year.

President Biden campaigned to treat climate change as a crisis, and since he came to power with Democrats in control of Congress as well, several major trade groups have announced support for new climate initiatives.

The API was one of the fiercest opponents just over a decade ago, when Congress last considered major legislation on the subject, a plan for issuers to pay and negotiate for their contributions to climate change. It is now just the latest of several to support similar plans to put a price or tax on emissions, following an announcement by the United States Chamber of Commerce in January.

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The draft of the institute’s statement fails to explicitly endorse a tax on carbon dioxide emissions or another specific price structure, and does not even contain the language of environmental activists who argue that the world should abandon fossil energy sources altogether. .

But a reversal continues that has accelerated since Biden’s victory. In recent weeks, API has stepped back in opposition to the direct federal regulation of emissions from the oil and gas industry. And it is emphasizing that industry can play an important role in helping the world tackle climate change. This included laying the groundwork publicly to support some form of price on carbon emissions.

In his January State of American Energy annual report, he listed “government-based market policies” to reduce emissions across the economy as a policy that would support progress. The Washington Examiner reported that it was the first time that this report included such language.

“The risks of climate change are real,” said the API’s annual report. “Market-based policies can promote significant emission reductions across the economy at the lowest social cost. An example could be carbon pricing – balancing the reduction of GHGs with flexibility and pace to keep energy accessible. “

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Internally, many API members are vehemently opposed to the endorsement of a carbon tax or the imposition of standards for the use of renewable energy, according to a person familiar with the internal discussions who described them as “heated”. The organization had similar internal conflicts over its position on methane emissions regulations, which the Trump administration decided to undo at the request of independent producers.

These struggles because of climate change have increased internal pressure on the API. While many of the smaller, US-based companies in their members want to push for traditional values ​​- less government regulation and more access to federal land – some of the main ones, especially those based in Europe, have pushed the organization to accept a continuous transition to cleaner fuels, often fueled by government intervention.

Just two days after the release of the annual report, Total SA announced that it was leaving the organization, saying that the API was not fully aligned with it with respect to climate change. The French oil giant has been pushing to turn its company into renewable energy production and sales and has pointed directly to API’s earlier opposition to carbon pricing and U.S. regulation of methane emissions in its decision.

“The (company) recognizes the considerable contribution of API, for more than a century, to the development of our industry,” said Chief Executive Patrick Pouyanné in a statement at the time. “However, as part of our Climate Ambition … we are committed to ensuring, in a transparent manner, that the industry associations of which we are a part adopt positions and messages aligned with those of (the company) in combating climate change.”