XOM Exxon Mobil Corp

By Timothy Puko and Bradley Olson 

Exxon Mobil Corp., once a powerful skeptic of global warming, will now be among the first oil companies to put money into the fight to make climate change a political priority in Washington.

The U.S.'s largest energy producer will commit $1 million over two years to promote a national tax on carbon as a way to address the environmental issue. The funding will back an initiative designed to appeal to the Republicans who now control Washington, and may open the door for Exxon's peers in the oil industry to follow.

As warnings over the dangers of climate change have grown, governments around the world have pursued increasingly stringent regulation of fossil-fuel companies. Exxon's move is an attempt to manage such pressure in the U.S. in ways it hopes will simplify requirements on the oil industry, according to a person familiar with the company's thinking.

Exxon sees a carbon tax as an alternative to patchwork regulations, putting one cost on all carbon emitters nationwide and eliminating regulatory uncertainty hovering over Exxon's business in states that might seek to target oil companies, the person said.

Exxon's contribution will go to Americans for Carbon Dividends, a new group, one of whose co-chairmen is former Senate Majority Leader Trent Lott. It is promoting a carbon tax-plus-dividend policy first proposed by two former U.S. secretaries of state, James Baker III and George Shultz, last year. All three men are Republicans.

The initiative's goal is to discourage companies from emitting carbon through the tax, while minimizing additional cost to consumers. Funds raised by the tax would be channeled to Americans through what the group calls a "carbon dividend" that it estimates could be as much as $2,000 annually per family. Monthly payments would go directly to the recipients. The tax would be "revenue-neutral," having no net effect on government receipts.

Exxon's move places it among global corporations that are promoting policies and business strategies to fight climate change. That list includes Apple Inc., Nike Inc. and McDonald's Corp., all of which have pledged to embrace renewable power and eliminate greenhouse gas emissions.

General Motors Co. , Johnson & Johnson , and other oil companies, including BP PLC, are founding members of the Climate Leadership Council, the organization fine-tuning the Baker-Shultz plan. "This is a real turning point in U.S. climate policy and politics," the council's leader, Ted Halstead, said of Exxon's commitment. "Corporations are leading us to a solution."

Exxon's decision to lobby for a carbon tax represents a remarkable shift from the company's stance roughly two decades ago. At the time, Exxon was at the center of industry efforts questioning the validity of global-warming claims and policy proposals -- tactics that critics say contributed to the political polarization that has impeded legislative consensus on the issue to this day.

As early as 1997, Exxon took out newspaper advertisements, titled "Unsettled Science," that asserted "scientists remain unable to confirm" whether humans are causing "global warming." That same year, in a speech just months before a multination agreement to reduce emissions was reached in Kyoto, Japan, Lee Raymond, then Exxon's CEO, said proposals to cut emissions "are neither prudent nor practical."

In the ensuing years, Exxon and a number of its peers spent tens of millions of dollars supporting such bodies as the Global Climate Coalition, the American Petroleum Institute and the American Legislative Exchange Council, all of which highlighted scientific uncertainty about rising global temperatures. As it did, Exxon also supported climate research, including a $100 million contribution to Stanford University to promote climate science and emissions reduction.

By all accounts, the company's stance softened after Rex Tillerson took over from Mr. Raymond in 2006. Exxon executives began affirming climate change in public statements, saying the problem "warrants action." The company also began supporting the idea of a "revenue-neutral carbon tax."

That change coincided with investor pressure to disclose the impact of climate regulations on its business -- and accusations from environmental advocates that while Exxon recognized the dangers of rising temperatures, it ignored the issue or even sowed doubt on the science.

Exxon's support for a carbon tax stems in part from a desire to alleviate some of these pressures. The proposal Exxon is promoting would include legal provisions to shield companies from liability for any connection between historical emissions and the effects of climate change, though not for fraud.

Exxon has pushed back on the accusation that it sowed doubt on climate change, emphasizing its contribution to more than 100 peer-reviewed research papers on the issue. A number of the lawsuits have been dismissed in federal court, and while the New York and Massachusetts investigations continue, the U.S. Securities and Exchange Commission recently dropped an inquiry into how the company accounts for the impact of climate change on its business and values its oil and gas assets

Its support for a carbon tax puts Exxon in rare opposition to allies in the Republican Party, at a time the GOP holds the White House and majorities in Congress. Republican leaders there have often derided the idea of global warming and disdained taxes as a solution.

Many Republicans influential in the Trump era believe a carbon tax of any kind would likely add to consumers' costs and thus view the proposition as simply too unpopular with voters. One Republican, Rep. Carlos Curbelo of Florida, proposed a carbon tax bill earlier this year. But while the Baker-Shultz plan is designed to be revenue-neutral by channeling all of the tax receipts directly to Americans, critics say it is too complicated to gain much traction politically.

"Not only are you asking the base to support climate policy, but you're asking them to support a tax. You're asking them to support a double whammy," said George David Banks, a former adviser to Mr. Trump on climate issues.

Exxon's push to make environmentalism part of its brand has accelerated. This year it pledged to cut its methane emissions 15% by 2020 and has touted its research to make fuels from algae. Also, its chief executive, Darren Woods, met with Pope Francis at the Vatican in June to affirm that the company wants to be "part of the solution" on climate change.

Last month Exxon joined Chevron Corp. and Occidental Petroleum to commit $100 million each to the Oil and Gas Climate Initiative's investment arm. The organization supports developing and using new technology to lower carbon emissions.

Exxon's promotion of a carbon tax marks "an interesting and important signal shift," said Sen. Sheldon Whitehouse (D., R.I.). "For years, Exxon's political effort was all on the side of climate denial and obstruction," he said. "At least Exxon money is now on both sides of the fight."

Write to Timothy Puko at tim.puko@wsj.com and Bradley Olson at Bradley.Olson@wsj.com

(END) Dow Jones Newswires

October 09, 2018 19:38 ET (23:38 GMT)

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