# 12 Four oil companies demand a carbon tax

Prior to the Doha conference the Carbon Tax Centre reported that Shell, and Statoil, together with the world’s third largest airline, Cathay Pacific and another 97 multinationals including  Unilever, EDF Energy, Braskem, Swiss Re, Ricoh and Skanska signed the Carbon Price Communiqué. They called on governments to introduce a price to "drive the investment" needed to deliver substantial reductions in greenhouse gas emissions. "A price on CO₂ can open the door to increased ambition. Putting a clear, transparent and unambiguous price on carbon must be a core policy objective," said the companies . Since that time BP has signed the same communiqué while Exxon Mobil reconfirmed that they support a carbon tax, A clear explanation was also given why oil companies demand a global carbon tax in the statement below:

http://www.globalwarming.org/2012/12/03/say-it-isnt-so-exxon-supports-a-carbon-tax/

“Big Oil is coming out of the closet.  Exxon Mobil confirmed earlier this month in a Bloomberg Businessweek article that they support a carbon tax. Shell and BP have signed a Climate Price Communiqué that was distributed on 29th November at the eighteenth Conference of the Parties to the United Nations Framework Convention on Climate Change” .

“The most obvious reason why big oil and gas companies would support a huge new tax on their own products is that it would kill coal first.  Burning coal emits roughly twice as much carbon dioxide as producing the same amount of energy by burning natural gas. That would provide a huge incentive for utilities to switch to natural gas.  Exxon Mobil owns the world’s largest privately-owned reserves of natural gas.  Shell and BP also own huge gas reserves.”

Cathay Pacific may look at efficiency. According to http://downloads.cathaypacific.com/cx/aboutus/sd/2011/operating/climateChange_30yearStory.html  their airplanes are quite fuel efficient. It can be speculated that they would welcome high fuel prices to further enhance their competitive position until other airlines have obtained more fuel efficient planes.

From the above it follows that a global carbon tax would result in substantial GHG reduction for power generation and air travel without having to encourage it with complex subsidies. Despite all this good news the carbon tax has been politicised to such extent that the general public is not aware that many studies have shown that carbon pricing does not hurt the economy. According to (http://www.sustainableprosperity.ca/dl891&display” a meta-analysis conducted by the World Bank  reviewed 103 studies on environmental fiscal reform and employment impacts. The review revealed that 73% of studies showed a positive influence on employment, 24% showed a negative impact on employment and the remainder showed no impact on employment. An in-depth European Union study of the tax shifts undertaken by Denmark, Sweden, Finland, the United Kingdom, the Netherlands and Germany found that five of the countries experienced modest economic gains as a consequence of the carbon/energy tax shift while one country, the United Kingdom, experienced a neutral economic outcome.”

In the US 2 studies showed that the Regional Greenhouse Gas Initiative covering 10 states is quite profitable. (see real-world example of carbon pricing benefits exceeding the costs )For British Columbia, a Canadian province, there were at least 2 studies. One by the Pembina Institute http://www.pembina.org/media-release/2234  for $20 per ton of CO₂ and the latest by Professor Elgie  as reported by http://www.vancouversun.com/business/carbon+working+reduce+emissions+study/8701325/story.htmlshowing  for the present $30 per ton of CO₂ . Both studies show that there is no adverse economic impact. The latter study shows that the consumption of petroleum products has decreased by 17.4%, while it rose by 1.5% in the rest of Canada.

 In the US and Canada there are organisations  publishing figures how much households in would pay for a national carbon tax, without showing how much households would get back through lower income taxes and special grants. This has left the impression that pricing CO₂ emissions is a tax grab rather than a tax shift to make green energy more competitive. In British Columbia all the carbon tax money has to be refunded to taxpayers and the low income people who pay no taxes. By law the province has to table an annual plan. ( See http://www.fin.gov.bc.ca/tbs/tp/climate/tax_cuts.htm).  It lists in detail how the money collected was distributed and what the projections are for the next year.

 The British Columbia carbon tax system has been praised by economists in the US and Britain as a perfect example on how easy it is to implement and administer. It will be copied by Oregon and Washington States to create the Pacific Coast Collaborative, which includes California, Alaska, Oregon, Washington and British Columbia. The four states and one province have a combined population of 53 million people, with a gross domestic product of $2.8-trillion. The governor of California praised the agreement as follows: “California introduced a carbon pricing mechanism as part of its carbon cap-and-trade system.“California isn’t waiting for the rest of the world before it takes action on climate change.” California Gov. Jerry Brown said in a statement. “Today, California, Oregon, Washington and British Columbia are all joining together to reduce greenhouse gases.”  For more information see http://business.financialpost.com/2013/10/29/b-c-reaches-carbon-pricing-deal-with-oregon-washington-states/?__lsa=d9c1-179f

Since the above details of the tax system are not widely known, the public and many politicians still have a negative opinion about taxing carbon. If all politicians in various countries could get together and look at all this information with an open mind it would be so much simpler to implement a healthy global carbon tax as envisaged by 4 major oil companies, the world’s third largest airline and other major companies . Note that Unilever  is the world's third-largest consumer goods company. EDF Energy is an integrated energy company in the United Kingdom, Braskem is a Brazilian petrochemical company. It is the largest petrochemical company in Latin America and one of the largest in the world, Swiss Reinsurance Company Ltd^[2] , generally known as Swiss Re, is the world’s second-largest reinsurer,  Ricoh produces electronic products The company is the largest copier manufacturer in the world. Skanska AB, is a multinational construction and development company based in Sweden, where it also is the largest construction company. Despite all this pressure from business leaders the politicians keep fighting each other, while nobody explains how carbon tax works. It can be seen in the following  Canadian example:

“Liberal leader Justin Trudeau mused about "putting a price on carbon pollution" at an address to Calgary’s Petroleum Club. Subsequently, Conservative MP Ryan Leef stood in the House to make this claim.

“The Liberal leader has lent his support to the radical NDP centrepiece of irresponsible economic management, whose $20-billion carbon tax would raise the price on absolutely everything. However, our government rejects that idea to impose a job-killing carbon tax that would increase the price on everything, including gas, electricity, and groceries--a tax on all Canadians.”

He could have added that if the BC example would be followed, the $ 20 billion would flow straight back to the taxpayers and the lower income families who don’t pay taxes. That way everybody can afford to pay for the higher priced goods. He could also have mentioned that those people who, through car pooling and using bicycles or public transit, save on fuel, still get reimbursed with the full tax amount of average fuel consumption, With that extra cash in hand they could invest in a heat pump system for their house so they can heat it at roughly 1/3  to 1/5 of the customary energy input by cooling the outside air, soil or groundwater.
{seehttp://www.nrcan.gc.ca/sites/oee.nrcan.gc.ca/files/pdf/publications/infosource/pub/home/heating-heat-pump/booklet.pdf)

 The heat is delivered as hot air to the existing duct system and during the summer the process can be reversed to provide air conditioning for the entire house. Only electricity for pumps  compressors and fans is required. Unless the power is generated by fossil fuel, there will be zero GHG emission. A heat pump system like that costs $6000-$9000 (seehttp://www.heatpumppriceguides.com/) and there is a lot of labour involved. Such green jobs, along with those created because wind farms, solar fields and tidal power become more competitive, will certainly compensate the “job killing” mentioned by Mr Leef. Note again that 73% of the 103 studies analysed by the World Bank showed that carbon pricing has a positive impact on employment.

Without that extra information Mr Leef’s statement is as misleading as what the powerful Heritage Foundation published in the US. They claimed that one of the US bills (Waxman-Markey) would cost the average household $1500 per year while the Congressional Budget Office, the Environmental Protection Agency and several others showed $150 per year after accounting for tax cuts and special rebates. That bill would by 2020 have reduced the GHG emissions to 17% below 2005 levels, as required by the Copenhagen agreement.  $150 per year per household is a small sacrifice to achieve that much.

 No national carbon tax and very high per capita emissions puts Canada in an awkward position. Environmentalists rank Canada as # 58 and the US as #43 out of 61 countries based on 5 criteria. Denmark, Sweden and Portugal are #1,2 and 3  so it is no wonder the Europeans and even  Americans want to stop our pipeline projects. In London the Canadian Prime Minister was met by 30 protest organisations from both sides of the Atlantic while 6 MPs tabled a motion to keep Canada’s oil sand products out of Europe.( See UK Tar Sands Network info@no-tar-sands.org ) The US objection is based on our emissions rising while they go down in the US, as can be seen in http://www.economist.com/blogs/americasview/2013/08/climate-policy-canada?fsrc=scn/tw_ec/the_land_of_green_and_money In Copenhagen, Canada and the US both signed an agreement to achieve 2020 emissions at 17% below 2005 levels. The US doubts that we can achieve our commitment

Insufficient pipeline capacity means that Canada has to sell it’s oil at bargain prices. In 2013 Alberta’s Energy minister estimated the losses at $20-$30 billion per year. (See http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/alberta-scans-the-compass-for-crude-oil-export-options/article7536306/ )

This must have resulted in many billions of lost tax revenue for the federal government. Those billions could have been used to improve public transit and fund other green projects. Until a global carbon tax has been established demand for oil will keep rising and it makes no difference in the world’s GHG emission whether Canada  supplies  it or gives the business to other countries. Since it is dangerous to keep shipping oil by rail we have to look seriously at all pipeline proposals. There is a lot of technical information about pipelines and marine transport available on the internet. It is not published in newspapers and magazines but is essential information to form an opinion about pipeline projects. Many of the previous disasters were caused by inadequate instrumentation extreme cost cutting and insufficient oversight. Many details about pipelines and carbon tax can be found on this blog. Canada hopes to export oil via 3 additional pipelines. The Northern Gateway is the closest to proceed. The marine transport has been approved and the pipeline will be approved when many tricky conditions have been met. The second article in post 1 describes under points 12, 13 and 14 what went wrong with pipelines , what improvements are contemplated an how much details have as yet to be published to assure the public  that the Northern Gateway project will be safe. Although Transport Canada approved the marine transport for the project, little is published about all the tricky operations and how specific concerns raised at the inquiry have been resolved.

As a final note it must be recognized that a global carbon tax would allow all countries to tax their carbon exports without unfair competition.  At the present BC tax rate of $30 per ton of CO₂ Canada would cash in another $9 per barrel of oil and $53 - $62 per ton of coal. Oil will in the foreseeable future always be required to power ships and airplanes, provide chemicals and produce many of our goods. Metallurgical coal is an essential reduction agent to produce the iron from which steel is made so that export won’t be lost . Hence Canada will always be one of the rich countries blessed with carbon resources. Obviously the tax proceeds from carbon exports have to be shared with countries which have no taxable carbon but have to live with the rising energy costs and adapt to climate change. How to achieve this sharing is one of the stumbling blocks at the UN negotiations.

If you are concerned about climate change and agree with all or part of the points above please paste them in an email to Mr Harper, the Canadian Prime Minister at pm@pm.gc.ca or any other politician who has to be persuaded to start taxing carbon. Please mention how important carbon tax is and that it does not hurt the economy.