In late October, Exxon Mobil CEO Rex Tillerson announced that his company is backing the concept of a carbon tax, saying that climate change brings real risks, and serious action is required to mitigate them.
“We have long used a proxy cost of carbon… there’s a range depending on the country, depending on the tax that we think would be appropriate,” Tillerson explained at the Oil & Money conference in London. “We’re trying to influence and inform people and business on the choices they make.”
And Exxon Mobil isn’t alone: in a letter to the United Nations Framework Convention on Climate Change (UNFCCC), BP, Royal Dutch Shell, Total SA, Statoil, Eni and BG Group stated the same thing: that climate change is real, and must be addressed, including the institution of a tax on carbon emissions.
If it feels like you’ve just taken a triple-gainer down the rabbit hole, that’s understandable: it was just last year that Exxon Mobil’s research into, and subsequent coverup of climate change came to light, leading them to fund global warming denial and misinformation campaigns. So why the sudden about-face? What could a cadre of major heavyweights in the oil and gas industry find compelling about a potential increase in their operating costs?
In the short term, they may be looking at quashing a major, and much older, competitor: coal. Coal use is far more carbon intensive than petroleum, and even more so when compared to emissions from natural gas, so a carbon tax would be much higher on that fuel source. These higher costs would help push energy producers that are currently using coal to convert to petroleum and gas use, a move that Big Oil would only be too happy to accommodate. This may be doubly so for US-based Exxon Mobil, as president-elect Donald Trump has promised to rekindle America’s coal industry, potentially cutting into the company’s profits.
Vox’s David Roberts also theorizes that, in regards to the long-term outlook, many oil companies might be reading the writing on the wall: the politics of climate change appear to be dictating a move away from carbon-based energy, whether they like it or not, and these oil giants don’t want to wind up like the dinosaurs that their profits are based on:
"In the long term, these companies are making a fateful wager: that they can participate in global decarbonization in a way that allows them time to establish a predictable market environment, make a lot of money, and manage a long-term transition away from their core products. It’s risky, but at this point it may be their only option."