As part of an important and increasingly global conversation on climate change in the months leading to the United Nations Climate Change Conference in Paris later this year, I wanted to reiterate our views on the most effective way to create and implement a workable global carbon policy.
As I have stated here before, the risks of climate change are real and the risks warrant action.
ExxonMobil is taking action by reducing greenhouse gas emissions in its operations, helping consumers reduce their emissions, supporting research, and participating in constructive dialogue on policy options.
Part of that dialogue is talking about effective policies to address the risks of climate change. We have several principles that we think are important for an effective policy to ensure the world will secure the energy required for economic growth in an environmentally responsible manner. We believe effective carbon policies should do the following:
- Ensure a uniform and predictable cost of carbon across the economy;
- Be global in application;
- Allow market prices to drive the selection of solutions;
- Minimize complexity and administrative costs;
- Maximize transparency; and
- Provide flexibility for future adjustments to react to developments in climate science and the economic impacts of climate policies.
For these reasons, as governments enact policies to address the risks of climate change, we believe that market-based efforts to reduce greenhouse gas emissions – like a revenue-neutral carbon tax – are more economically efficient policy options than regulations, mandates, or standards.
This message has been a part of the briefings we have been giving about the 2015 version of ExxonMobil’s Outlook for Energy: A view to 2040.
In the five months since we unveiled the 2015 Outlook, we have delivered more than 300 presentations to a wide variety of parties engaged in the public discussion about energy, the environment, and climate. We conduct such presentations each year to share our analysis of the energy supply and demand trends that will shape the future economic landscape.
These meetings have taken place all over the world and have included government officials (e.g. European Union, U.S. Department of Energy, members of congress), representatives from religious and faith-based institutions (e.g. Presbyterian Church USA, United Church of Christ, the Vatican), and officials from non-governmental and academic organizations (e.g. World Bank, Bipartisan Policy Center, and numerous universities).
One key point we make in many of these briefings is that ExxonMobil has included a proxy price on carbon in its business planning since 2007. This enables us to analyze the impact of a price on carbon on various investment opportunities. This proxy cost, which in some regions may approach $80 per ton, seeks to reflect all types of actions and policies that governments may take. Our analysis shows that a revenue-neutral carbon tax would be the most effective approach.