Oil’s biggest lobbying group killed carbon pricing. Now it supports them?

Twelve years ago, the American Petroleum Institute ran an ad in the print version of the Washington Post. “If you like $4 gasoline,” it read, “you’ll love the House Climate Bill.”

This was during President Barack Obama’s first term, when a gallon of gas cost barely $2.70, and API — a coalition of over 600 companies and the oil and gas industry’s top lobby group — was fighting against the Waxman-Markey Act, landmark legislation to put a price on carbon emissions across the country. The bill wouldn’t just hit Americans filling up at the pump, the group claimed, it would destroy millions of good-paying jobs and ruin the burgeoning fracking industry. API even helped fund splashy TV ads pushing back against the legislation. In one, a group of Americans slowly faded from view as their jobs disappeared. (Subtle.)

Now, however, the big oil group might be about to change its tune. The group is discussing a draft statement in support of putting a price on carbon emissions — the very same policy that they helped defeat 12 years ago. Such a price, in the form of a carbon tax or a cap-and-trade bill, would increase the cost of fossil fuels and theoretically help to cut carbon pollution across the entire economy. And API isn’t the only business and fossil fuel group coming around on“market-based” climate action. Last September, the Business Roundtable, a lobbying group of 200 CEOs including the leaders of Chevron and ConocoPhillips, announced its support for a carbon price; in January, the U.S. Chamber of Commerce, long one of the most powerful lobbying groups, did the same.

But are these claims evidence of a real change of heart — or just an attempt to sidestep even more costly regulations from the new, Democratically-controlled Congress?

“Our efforts are focused on supporting a new U.S. contribution to the global Paris agreement,” said Megan Bloomgren, API’s senior vice president of communications.

One way to think about the API’s shift is that the group is simply reacting to a changing of the guard in Washington, D.C. After four years in which former President Donald Trump backpedaled or eradicated many environmental protections, President Joe Biden made climate change a central issue of his campaign and a priority in his first months in office: Just hours after his swearing-in ceremony, he put the U.S. back in the Paris Agreement. And companies are beginning to take notice. In the weeks since, a flurry of automakers have pledged to shift production toward electric vehicles, and other corporations are ramping up plans to zero out their carbon emissions over the coming decades. Against this backdrop, API’s members may be realizing that the days of spewing carbon dioxide freely into the atmosphere are over — and hope to maintain some influence over any legislation.

“It may well be that the API is realizing that carbon pricing is an idea whose time has come,” said Anne Kelly, the vice president of government relations at the sustainability nonprofit Ceres. “They know that regulations are coming, and so I think they want to be a part of those negotiations to shape what a carbon pricing system would look like.”

But the move could also be an attempt to hamstring other, less palatable policies from gaining too much traction, like more stringent regulations. Democrats in the House and Senate have largely turned away from carbon taxes and cap-and-trade in favor of things like a clean electricity standard — a mandate that the country’s electricity be produced by clean sources by 2035 — or other rules and regulations that would be overseen by the Environmental Protection Agency. On Tuesday, Democrats unveiled their first big climate proposal this Congress, which included such a standard, but no carbon tax.

The group’s draft statement seemed to confirm this. “API supports economy-wide carbon pricing as the primary government climate policy instrument to reduce CO2 emissions while helping keep energy affordable, instead of mandates or prescriptive regulatory action,” the statement read, according to the Wall Street Journal.

Barry Rabe, a professor of public policy at the University of Michigan, said that a carbon price seems less threatening to oil and gas companies than other regulations — the European Union and Canada already have prices on carbon that the fossil fuel industry has learned to live with. “It may be easier for them to kind of get their heads around a price,” he said.

And, of course, the devil is in the details. Fossil fuel companies and their lobbying groups have a long history of supporting climate legislation in theory, only to back out of it in practice. Early on in Obama’s term, the CEOs of ExxonMobil and BP (both members of API) were outspoken in their support of pricing carbon. But by mid-2009, once the Waxman-Markey Act was introduced and debated, API had turned its lobbying efforts against the bill — and few of its member companies protested, according to reports. More recently, BP, which once rebranded itself as “Beyond Petroleum,” promised to help Governor Jay Inslee pass a carbon tax in Washington State in 2018 — then dropped its support at the last minute.

“It doesn’t cost them anything to improve their images in the short term,” Rabe said. “But they aren’t pledging or committing to a specific policy right now — they’re supporting a broad concept.”

If a carbon price does reach the Congressional floor, API and other fossil fuel lobby groups will be working hard to make sure that it’s as favorable as possible to their interests. In practice, that will mean a lower price (some oil companies, like ExxonMobil and ConocoPhillips, already support a $40 per ton carbon tax that rises slowly over time) and potentially carve-outs, like immunity from lawsuits over extreme weather. “There is no such thing anywhere in the world as a pure carbon tax, where there aren’t carve-outs or exceptions for particular industries,” Rabe said.

For now, the group is wrestling with a changed political landscape and reported infighting within its own membership. Total, the French oil supermajor, left the group in January, criticizing API for supporting politicians who reject the Paris climate agreement and citing “differing positions” on carbon pricing. Without a change in API’s public messaging, other companies — also trying to burnish their climate bonafides — might follow.

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