2030 Finance | December 22, 2016

Could Trump be getting ready to pull a Nixon-to-China on carbon?

The team at


Climate Finance

His big projects in Russia and close relationship with Vladimir Putin have dominated most of the coverage of Rex Tillerson’s selection as President-elect Trump’s secretary of state.

Equally intriguing, from a more optimistic direction, is the ExxonMobil chief’s repeated validation of climate science and endorsement of a tax — yes, a tax — on carbon.

The world’s fears that the incoming administration will reverse course on climate action only increased when Trump picked as secretary of state the boss of the world’s largest oil and gas company, and a longtime business partner of Putin, to boot.

That follows the Trump team’s announcement of Scott Pruitt, attorney general of Oklahoma and the leading legal attack dog against Obama’s climate policy, as head of the Environmental Protection Agency.

But what if Trump has something more dramatic up his sleeve? The not-accidental visits of climate action campaigners Al Gore and Leonardo DiCaprio to Trump Tower added the kind of celebrity gloss that Trump loves. Gore exited with a cheshire-cat coyness after meeting with Trump and First Daughter Ivanka. DiCaprio told fellow diners at Rao’s that Trump would do the right thing.

Might that right thing be a tax on carbon? Such a market mechanism would set a price on greenhouse gas emissions and advantage low-carbon alternatives (including not only wind and solar, but natural gas, of which both Exxon and Russia have a lot). A carbon tax is not a perfect solution, of course: without rebates or other tweaks the tax could have a disproportionate impact on the poor. But putting a price on carbon is considered the key to jumpstarting market-based reductions in emissions.

Tillerson affirmed his support for a carbon tax as recently in October 19 in London, at a conference named, apparently without irony, Oil & Money. Tillerson laid out his acceptance of what is now the prevailing wisdom around climate action, including endorsement of the global climate agreement, even at an oil giant like Exxon. He’s worth quoting at length:

At ExxonMobil, we share the view that the risks of climate change are serious and warrant thoughtful action. Addressing these risks requires broad-based, practical solutions around the world.

Importantly, as a result of the Paris agreement, both developed and developing countries are now working together to mitigate greenhouse gas emissions, while recognizing differing national responsibilities, capacities and circumstances.

In our industry, the best hope for the future is to enable and encourage long-term investments in both proven and new technologies, while supporting effective policies. Which is what we are doing. We have long supported a carbon tax as the best policy of those being considered.

Replacing the hodge-podge of current, largely ineffective regulations with a revenue-neutral carbon tax would ensure a uniform and predictable cost of carbon across the economy. It would allow market forces to drive solutions. It would maximize transparency, reduce administrative complexity, promote global participation and easily adjust to future developments in our understanding of climate science as well as the policy consequences of these actions.

Environmental groups deride Tillerson’s statements as greenwashing. They point to Exxon’s well-documented history of covering up its own research findings in the service of a campaign to spread doubt about climate science. (A big tip of the hat to Inside Climate News for the Pulitzer-finalist project that nailed the hidden history.)

The most likely scenario is still that “Trump, Putin, and ExxonMobil team up to destroy the planet,” as ThinkProgress put it. (After this article was first posted, Trump named former Texas Gov. Rick Perry as his energy secretary.) In May, Trump tweeted his opposition to a carbon tax.

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Intriguingly, the report Trump was disputing had an advisor, North Dakota Republican Rep. Kevin Cramer (R-N.D.), suggesting the notion of a fee on carbon. With anti-tax activists like Grover Norquist vowing to hang a carbon tax around the Democrats’ neck, Cramer said he was making no such recommendation (and The Hill pulled the original story from its website).

But let’s play out the alternative scenario. Only a Republican president could get a carbon tax through Congress. Only an oilman could win over the fossil fuel industry. Tillerson can blame Exxon’s disinformation campaign on his predecessor, Lee Raymond, from whom he took over in 2006. The EPA’s Pruitt could take the edges off the Clean Power Plan and, buy off red states and fossil fuel dinosaurs.

Low oil prices and a growing number of jobs in renewables make a carbon tax affordable and even populist in wind-rich (or for that matter, steel-producing) states.

The president could send his Secretary of State to Russia to cut a carbon-pricing deal with Putin. (A carbon tax advantages gas-rich Russia and Exxon, versus oil- and coal-heavy competitors.) Trump could push through a carbon tax and take a bow, with Al and Leo at his side. OK, a guy can dream.

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Photo credit: Michael Klimentyev / Sputnik.