Bucking Big Oil Companies, US House Set to Condemn Carbon Tax

(Bloomberg) - Congressional Republicans are poised to approve a non-binding resolution to condemn the idea of a carbon tax, putting lawmakers on record opposing an approach to combating climate change favored by Exxon Mobil Corp. and other large oil companies. 

The House strategy, pushed by Majority Whip Steve Scalise, a Louisiana Republican, and backed by Koch Industries Inc., uses the symbolic measure to lock in hundreds of votes against a tax on carbon dioxide emissions blamed for climate change. The tactic is designed to weaken the ability of a future president and Congress to levy one to help pay for a broad overhaul of the U.S. tax code, said Republican strategist Mike McKenna.

“The more you vote on something, the harder it is to vote the other way," McKenna said.

The House last touched the issue in 2013, when it voted 237-176 to adopt a Scalise-sponsored amendment requiring the administration to receive approval from Congress before implementing a carbon tax. By contrast, the measure up for a House floor vote Friday is a stand-alone resolution asserting that "a carbon tax would be detrimental to American families and businesses, and is not in the best interest of the United States."

Regulatory Replacement

Some big oil companies disagree with the Republican effort. That includes Exxon Mobil, which hasn’t taken a formal position on the Scalise resolution but has lobbied on Capitol Hill for a revenue-neutral carbon tax to take the place of an array of environmental regulations that raise the cost of fossil fuels. 

A revenue-neutral carbon tax would "ensure a uniform and predictable cost of carbon, allow market forces to drive solutions, maximize transparency to stakeholders, reduce administrative complexity, promote global participation and easily adjust to future developments in climate science and policy," said Exxon Mobil spokesman Alan Jeffers. "In order to set a uniform cost of carbon across the economy, a carbon tax has to replace all the other patchwork of regulations that are designed to put a price on carbon.”

The issue divides the oil industry, with several other large integrated companies also favoring a carbon tax, even though it is being fought by many independent producers that lack pipeline and refining operations. 

Shell, BP

BP Plc says a well-constructed carbon tax or cap-and-trade system would encourage energy producers and consumers to reduce emissions. Royal Dutch Shell Plc Chairman Charles Holliday calls a carbon tax the most effective and practical way to reduce greenhouse gas emissions.

The industry split may be one reason the American Petroleum Institute declined to weigh in on Scalise’s carbon resolution. "We are not taking a position on a carbon tax," spokesperson Sabrina Fang said by e-mail. The group wasn’t wary of opining on another measure hitting the House floor Friday: a resolution opposing President Barack Obama’s proposed $10-per-barrel fee on oil. That idea "is bad energy policy," anti-consumer "and will hit everyone in the wallet," Fang said.

Scalise’s carbon tax resolution comes as the idea is gaining traction in some circles. Long favored by some economists as the most straightforward way to put a cost on carbon dioxide, it has gained some high-profile Republican evangelists. For instance, former South Carolina congressman Bob Inglis is now pushing the idea as a free-market solution to climate change.

Koch Lobbyist

In a letter to House members Thursday, Koch lobbyist Phillip Ellender endorsed the Scalise resolution. "Raising taxes on the energy that American families and businesses rely on every day will not help any hardworking citizens improve their lives," said Ellender, president of government affairs at Koch Companies Public Sector LLC.

Representative Jared Polis, a Democrat from California, said the scheduled floor vote shows inertia is building for a carbon tax. 

"You don’t see these kinds of resolutions if a concept and an idea don’t have momentum," Polis said during a speech Wednesday on the House floor. 

Because a carbon tax could generate big money for the treasury, it’s a tantalizing idea for lawmakers eager to balance the budget or offset cutting taxes elsewhere.


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Copyright 2016 Bloomberg News.

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