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The largest U.S.-based crude oil lobby has voted to support a measure that would tax or otherwise levy a price on carbon dioxide emissions.
While surprising that the American Petroleum Institute would support such a measure, there are two caveats: the API will support a carbon-pricing initiative only if it is applied economy-wide and only if it is a replacement for current greenhouse gas regulations, instead of in addition to them.
“We think that a carbon pricing policy that is market-based, transparent and economy-wide gives us the best opportunity to achieve that,” API President Mike Sommers said, adding that what the API won’t do is support “putting a price on carbon or carbon tax or whatever it is on top of the existing regulatory regime.”
A Wall Street Journal report earlier this month suggested that the API would be prepared to get behind a carbon pricing scheme as the most economical way to reduce emissions.
Given the current environment that has pushed the industry to clean up its act, Big Oil players such as BP have already endorsed such a measure. Of course, such large oil companies have access to the capital to pay for carbon emissions.
Smaller oil companies, on the other hand, may find it more difficult to come up with the cash.
Democrats have long tried to implement a carbon pricing scheme but have run into Republican roadblocks. The API’s support will lend credence to the concept that the industry is due for a carbon emissions fee.
Putting a price on carbon dioxide emissions will be key to fulfilling President Biden’s green initiatives, according to the National Academies of Science, Engineering, and Medicine.
Critics of carbon pricing have argued that it will only result in companies passing on the costs of emitting carbon dioxide to the end user. They also argue that doing this now would add even more costs to the average consumer at a time when many people are still out of work or have had their businesses disrupted.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.