Although we’re nowhere close to getting a carbon tax in the US, some of the biggest corporations are including it in their financial projections.
Why? Because it’s inevitable.
A wide range of companies are doing so: all five of the biggest oil companies, Walmart, utilities American Electric Power and Duke Energy, Delta Airlines, Microsoft, Procter & Gamble, General Electric, Walt Disney, ConAgra Foods, Wells Fargo, DuPont and Google. At least 29 major US corporations are doing so, according to CDP (formerly Climate Disclosure Project).
Including it in financial projections means it is already driving internal decisions, Tom Carnac, president of CDP North America told the NY Times. "Companies view the establishment of an internal carbon price as both an evaluation of risk and a business opportunity if they take steps to limit carbon pollution before others do."
ExxonMobil includes a $60 per ton carbon price in its financial plans. “Ultimately, we think the government will take action through a myriad of policies that will raise prices and reduce demand” of carbon-polluting fossil fuels, Alan Jeffers, an ExxonMobil spokesman, told the NY Times.
Walt Disney Company carbon price is $10-20, Google’s is $14 and Xcel Energy’s is $20.
Years ago, many of the biggest corporations asked the Bush Administration to set a price on carbon to give them the certainty they need. They were ready to adjust their businesses to a carbon constrained world and believed strongly that they could do so profitably, but not without the same clear rules for everyone.
So now, they still proceed, but in anemic ways, knowing that day will come, but not knowing when or what form it will take.
Since then, leading corporations have sent numerous letters to Congress, asking for action on climate change.
State-Level Carbon Taxes on the Horizon
Last month, Pacific Northwest states and British Columbia announced they will harmonize climate change policies. Oregon and Washington are planning carbon pricing programs and clean fuel standards already in place in California and British Columbia.
In Massachusetts, Senator Barrett, who will likely become Senate President next year, has introduced a bill that prices carbon and returns most of the revenues to taxpayers in the state, in the same way British Columbia does.
This could expand broadly on the state level when the EPA issues greenhouse regulations for existing power plants next year, because many people are asking EPA to give states lots of flexibility in how they are implemented. Many states could decide to charge a carbon tax.
The main reason the US doesn’t have a federal carbon tax – and won’t in the near future – is because Republicans – all of which denied the existence of climate change in the 2012 elections – won’t allow it. They, of course, are doing the fossil fuel industry’s bidding.
With the exception of Koch Industries (which still leads the charge against it), oil companies are coming around though. The NY Times points out that while Exxon was known for supporting organizations that questioned the science of climate change in the past, they are now positioned to profit from a carbon tax as the biggest natural gas producer in the US. Today, ExxonMobil openly acknowledges that fossil fuels contribute to cliimate change.
ExxonMobil says it supports a carbon tax if it’s paired with equal cuts elsewhere in the tax code, which is exactly what British Columbia has done in its very successful carbon tax program – and which ALL mainstream economists say is the most effective way to address global warming, including the Congressional Budget Office (CBO), which ranks it as the best way to reduce the US deficit.
You can be sure these businesses would prefer a national carbon tax than a mosaic of different regulations from the states.
British Columbia’s Carbon Tax
Launched in 2008, British Columbia’s (BC) carbon tax has been working for five years, and the dramatic results show its value for the economy as well as reducing emissions.
The right-of-center government’s program taxes virtually all emissions from fuel combustion and returns 100% of the revenue to the public via reductions on individual and corporate taxes.
As of 2012, fuel consumption per person has dropped 17.4%, while rising 1.5% across Canada generally. Individual income taxes are now the lowest in Canada and are down 20% for corporations.
Environmental Entrepreneurs (E2), an arm of the Natural Resource Defense Council, interviewed Dr. Stewart Elgie, a law professor at University of Ottawa who was intimately involved in BC’s original policy debate and authored the Five Year Report that summarizes the impact of the resulting carbon tax.
His conclusion is that BC’s carbon tax has been the most effective way to lower taxes and allow business to flourish and put more money in the hands of individuals; and it is the most efficient way to reduce greenhouse gas emissions.
Here are some of the lessons learned from the BC experience:
- How carbon tax revenues will be distributed must be made before the tax goes into force and clearly communicated with the public.
Since 2008, the tax has been raised $10 to $30, but there’s no interest in repealing it because business and individual taxes would rise.
- The carbon tax must be perceived as fairly applied across the economy – no exemptions. Transparency is crucial as to how much is raised and where it’s disbursed.
- Fiscal conservatives advocated for its approval because it cut taxes and was revenue neutral.
Read our article, Americans Already Pay a Carbon Tax.
Here is CDP’s report: