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The American Petroleum Institute is set to unveil a declaration in which it endorses carbon pricing as a means of achieving the goals of the Paris Agreement on Climate Change, according to a Wall Street Journal report citing a draft version of the statement.
“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,” the WSJ quoted the statement as saying.
Also according to the statement, carbon pricing would be the most economical way to reduce emissions.
Carbon pricing has been a controversial topic of discussion in the U.S. energy industry and in government.
Last year, for instance, BP was among a group of companies, including top Wall Street banks, that urged Washington to put a price on carbon to mitigate the effects of greenhouse gas emissions on the economy and, more specifically, the financial system.
A report commissioned by the CFTC at the time found that “Both physical and transition risks could give rise to systemic and sub-systemic financial shocks, potentially causing unprecedented disruption in the proper functioning of financial markets and institutions.”
“This report begins with a fundamental finding—financial markets will only be able to channel resources efficiently to activities that reduce greenhouse gas emissions if an economy-wide price on carbon is in place at a level that reflects the true social cost of those emissions,” the authors wrote.
Democratic legislators tried more than once to win support for carbon pricing initiatives, but they invariably failed during the two Obama terms. Meanwhile, incentives for renewable power generation and other emission-reducing initiatives have had some effect in reining in emissions, which is why the current administration is betting mainly on continuing this course.
Recently, however, a new report from the National Academies of Science, Engineering, and Medicine warned that the Biden administration’s green plans will fail without putting a price on carbon.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.