The New York Times op-ed opened on a provocative note: “There is a real danger that the climate debate is deteriorating into a game of name-calling,” it began, “with oil and gas companies all too often portrayed as opponents of climate progress.”
The January 2020 article was written by the founder of the Climate Leadership Council (CLC), a Washington DC-based non-profit that advocates for scrapping certain fossil fuel regulations and replacing them with a carbon tax, with the proceeds from the tax returned to Americans as a rebate. Among the group’s “corporate founding members” are some of the world’s biggest oil and gas companies, including Shell, BP and, until 2021, Exxon – companies that have indeed spent decades, and billions of dollars, opposing climate progress.
The CLC launched in 2017 with a report by a “who’s who” of pre-Trump Republican officials and insiders, including former Republican cabinet secretaries James Baker and George Shultz. Since then the CLC and its lobbying arm have steadily attracted elite media coverage and supporters, including the current treasury secretary, Janet Yellen. “There is wide agreement among economists that this is the most effective and market-friendly way to reduce carbon emissions,” Yellen told the Washington Post in 2020.
The fossil fuel industry has a long history of hiring public relations firms to create front groups to obstruct climate legislation and sow confusion and doubt about climate change. But the CLC is not a front group. The organization’s “carbon dividends” proposal is real.
Last month when a bipartisan pair of US senators introduced a bill that lays the groundwork for a carbon tariff, the Prove It Act, the CLC hailed the move as “an important step towards better understanding, and ultimately leveraging, America’s carbon advantage”.
To its critics, however, the policy details of the CLC plan and those it supports are secondary to what the group itself offers its oil and gas industry members: a climate change “solution” that they can be for – one that, conveniently, stands little chance of becoming law.
As fossil fuel companies continue lobbying against climate legislation, funding anti-climate politicians, bringing home sky-high profits from oil and gas sales, and doubling down on business models anchored on fossil fuel extraction and consumption, public participation in a “climate leadership council” appears to be an asset that corporations can deploy to perform the role of problem-solver while justifying their opposition to other laws and regulations.
“There is a part of me that sees this as, ‘We can hold industry accountable a little bit without having to be in a place of discomfort, [without] holding them accountable in the way that climate change, environmental injustice, requires,” said Dana Johnson, the senior director of strategy and federal policy at We Act for Environmental Justice. “I think it gives people the opportunity to say that they’ve done something … It’s safe.”
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Titled “The conservative case for carbon dividends”, the original CLC report called for a steadily rising carbon tax that “might begin at $40 a ton”, with the proceeds returned to Americans in checks estimated to start around $2,000 a year for a family of four. The plan also featured a tariff on imports from countries without carbon pricing to discourage commerce from moving abroad and to give “lower-emitting US manufacturers … a competitive advantage”, said Greg Bertelsen, the group’s CEO, in a statement emailed to the Guardian.
The final plank of the CLC’s original plan was the repeal of not just federal emissions regulations but the authority of the Environmental Protection Agency (EPA) to regulate carbon emissions at all. And buried in that section was another line that would be easy to miss: that a carbon tax “would also make possible an end to federal and state tort liability for emitters”. This otherwise innocuous sentence captured what Richard Wiles, the head of the non-profit Center for Climate Integrity, called the oil and gas industry’s “number one thing”: legal immunity for companies’ contributions to global warming and to the damages of climate change, and for their decades-long campaigns to deceive the public and obstruct legislative action.
The CLC removed the liability provision from its proposal in September 2019. “Misinformation on the issue was distracting focus away from the many economic and environmental upsides of the plan,” Bertelsen said. Asked whether the organization would consider resurrecting some sort of liability waiver if it meant gaining industry support for carbon dividends legislation, the CEO said that “we have no plans to revisit the issue”.
But the CLC’s agenda might differ from that of its industry backers. “No one is fooled into thinking [that] because they took it off their website,” oil and gas companies will not continue to push for a liability waiver, Wiles said. Even Axios, which has given the CLC steady coverage and space to make its case, noted that “a similar proposal can always be added in the actual legislative process.”
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The CLC’s support is not limited to the fossil fuel industry. Among the group’s corporate founding members were Conservation International and the Nature Conservancy, two environmental non-profits. Today it also counts as organizational partners companies such as Goldman Sachs, Microsoft, PepsiCo and JPMorgan Chase.
But the CLC’s partners also include BP, Shell, Total, ConocoPhillips and the mining giant BHP; until 2021, one of its most prominent members was ExxonMobil. In response to questions from the Guardian about the organization’s backing from companies that have helped create and sustain the climate crisis, the CLC sent a statement that echoed the founder’s New York Times op-ed: “Energy companies have the scale, research and development budgets, expertise and infrastructures needed to expand low-carbon energy technologies … and to pioneer new technological breakthroughs.”
If fossil fuel giants can indeed contribute to the CLC, the companies have found ways for their membership to contribute to them in return. Exxon’s trajectory is illustrative. Even before the CLC officially revealed its corporate supporters in June 2017, Exxon’s chairman and CEO, Darren Woods, announced the company’s support during its annual shareholder meeting. Not long after, Exxon began peppering public filings and corporate publications with mentions of its membership. In the company’s next “corporate citizenship report”, Exxon wrote that its participation in the CLC was evidence of how Exxon was “engaging on climate change policy”. The following year Exxon’s sustainability report included multiple mentions of its CLC membership.
On 8 October 2018, the UN Intergovernmental Panel on Climate Change (IPCC) released a monumental assessment warning that keeping global temperatures from rising more than 1.5C “would require rapid, far-reaching, and unprecedented changes in all aspects of society”, including deep emissions cuts. The very next day, as the University of Miami climate disinformation expert Geoffrey Supran noted, Exxon announced it would donate $1m over two years to Americans for Carbon Dividends, the CLC’s lobbying arm. The $500,000 that Exxon would give in 2018 paled in comparison with the $11.15m the company would spend lobbying that year – let alone the $71.9bn it would report in revenue that quarter. Yet the donation nevertheless earned the company headlines in Reuters, the Wall Street Journal, Axios, the Washington Post and CNN, among other outlets widely read by lawmakers, staffers and government officials. In a tweet, Supran called the company’s donation “PR Crisis Management 101: Change the narrative”.
Over the following years Exxon continued to tout its support for carbon pricing and its membership of the CLC. In the spring of 2021, a group of Exxon shareholders asked the company to publish a report outlining how its climate lobbying efforts “align with the goal of limiting average global warming to well below” 2C. In explaining why shareholders should vote against the proposal, Exxon’s board said that such a report would be “unnecessary” –in part because the company was already a member of the CLC.
In August 2021 Exxon was “suspended” from the CLC after a company lobbyist was caught on tape saying that Exxon had pledged to support a national carbon tax because such a policy was unlikely to ever become law. “A carbon tax is not going to happen,” the lobbyist said. Supporting the concept “gives us a talking point that we can say, ‘Well, what is ExxonMobil for? Well, we’re for a carbon tax.’”
While the comments sparked a media firestorm, they were little more than a concise articulation of a strategy that Exxon and its competitors had been executing transparently for years, said Matto Mildenberger, a political science professor at the University of California Santa Barbara (UCSB). “There has been a serious effort by some big fossil fuel interest groups to support a carbon tax because they understand that it’s much less likely to happen,” said Mildenberger, an expert in the politics of climate change. “And even if it does happen, it’s never going to be [politically] possible to increase that carbon tax to a level that would threaten the economic wellbeing of entrenched fossil fuel interests.”
Exxon has reached the same conclusion. In 2018 the state of New York sued the oil giant, alleging that it had deceived its shareholders by asserting that the implementation of a carbon tax would not devalue the company’s fossil fuel reserves enough to threaten its business model. “Exxon was essentially saying, ‘We can have a carbon price, and it won’t strand our assets,’” said Benjamin Franta, head of the Climate Litigation Lab at Oxford’s Sustainable Law Programme.
The company’s argument, Franta said, was that even with a $40-a-ton tax on carbon–the starting point of the CLC proposal–“our fossil fuel development is so profitable that even if a carbon price is enacted, it won’t strand our projects, and therefore we’re a safe investment.” Exxon won the case.
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One of the CLC’s key selling points for its plan is the organization’s own polling, which suggests bipartisan public support for “charging fossil fuel companies for their carbon emissions and giving the money back to Americans with the goal of cutting emissions”. Crucially, however, these questions are about an idea. As soon as this idea begins to shift from a “talking point”, as the Exxon lobbyist put it, into a tangible legislative proposal, it is likely to be rendered politically toxic.
Canada is among the handful of countries to have implemented some sort of carbon dividend. In Canada, UCSB’s Matto Mildenberger and his colleagues found, four out of five Canadians receive more money from the dividend than they pay in higher taxes. Yet many people are nevertheless convinced that the policy makes them worse off. “Even telling people that they had received this money did nothing to change their support for the policy,” Mildenberger said. “Their understanding of [the] costs and benefits are mediated by politics.”
Mildenberger’s US surveys have yielded a similar conclusion. As soon as politics enters the equation – an inevitability in any American debate about climate policy – public support for a carbon dividends plan immediately plummets. “The minute you add even the slightest mention of politics into this scenario … that weakens all the effects [of support for the concept],” Mildenberger said. Once you suggest to people that Democrats and Republicans disagree over whether carbon pricing is a good idea, “people just stop trusting much of the information you’re giving them.”
To skeptics of the carbon dividends proposal, the fact that it remains trapped in the realm of the hypothetical helps explain the industry’s enthusiasm for it – and its determination to keep it there. Decades of unsuccessful attempts to implement some form of carbon pricing in the United States suggest that oil and gas companies’ rhetorical support for the idea of carbon dividends has little bearing on whether they would back an actual carbon dividends proposal.
“They are playing a two-level game here,” Mildenberger said. “On one hand, part of their strategy is to ensure that whatever policy gets written into law, or is voted on, is the lesser evil of the policies that might be voted on. And then they’re still going to try and stop even that policy from being passed because they prefer no policy.”
In the late 1980s, for instance, when scientists and environmental advocates began calling for mandatory emissions reductions, “already at that time you [saw] industry spokespeople saying, ‘We need market-based mechanisms rather than mandates,’” said Oxford’s Benjamin Franta. Seemingly in response to that preference for market-based policy, the Clinton administration moved to pass a tax on heat levels in fuel. But by June 1993 the administration was forced to abandon the effort after intensive industry lobbying. Companies and their trade groups publicly opposed the tax, while at the same time maneuvering feverishly (and successfully) to secure extensive loopholes and exemptions in the event that it did pass.
The Obama White House also encountered what Franta called the industry’s “bait and switch tactics”. The administration’s cap-and-trade proposal, which Obama repeatedly heralded as market-based, would have limited national carbon emissions and created a new market for emitters to buy and sell permits. Despite previous industry support for cap and trade and months of dealmaking with the administration and congressional negotiators, the bill ultimately died in the Senate after an onslaught of hundreds of millions of dollars of fossil fuel lobbying and campaigning.
State-level carbon pricing efforts have run into similarly vehement opposition. In 2017 BP joined the CLC as a corporate founding member and began promoting its membership on its website and in corporate reports. The following year the company spent about $13m opposing a carbon pricing measure in Washington state, even though the carbon tax in the state’s proposal would have begun at $15 a ton – less than half of the starting point of the CLC plan, which BP still claims to support. The sum that BP spent to defeat the Washington effort was 13 times greater than what the company would later pledge to the CLC’s lobbying arm.
“Most oil and gas companies recognize the threat of climate change and want to be part of the solution,” the CLC’s founder wrote in that 2020 op-ed. Yet today these same companies are still lobbying to block climate laws and regulations. They’re still helping elect anti-climate politicians. They’re still trying to capture international climate conferences. They’re still developing business plans centered on fossil fuels. They’re still choosing not to channel their immense political power into policies that might threaten their profits.
“I don’t know what world people are living in when they think the most powerful companies in the history of mankind are going to suddenly wake up and say, ‘You know what? This oil and gas thing – I don’t know what we were thinking,’” said the Center for Climate Integrity’s Richard Wiles. “There’s just no way. Why? Why would they do that?”
