The tax would be $40 per ton of carbon dioxide, equal to about 36 cents per gallon of gasoline. It would also raise costs for natural gas and coal.
“A company getting behind its product being taxed is a very rare thing,” said Lawrence Summers, a Harvard University economics professor and former treasury secretary. “This reflects a new and important awareness that we have to do big things about climate,” he said, praising “the impressive bipartisan coalition behind the carbon dividend approach.”
ExxonMobil has long supported a carbon tax. In 2009, the company’s then-chief executive, Rex Tillerson, said during a speech in Washington that he backed a $20-a-ton carbon tax. But Tillerson never pressed lawmakers on the issue. Other major oil companies, including BP and Royal Dutch Shell, have also supported carbon taxes.
Recently, ExxonMobil joined the Climate Leadership Council, which was created to develop the Baker-Shultz plan, under which a carbon tax would be established at $40 a ton and increase steadily over time. The revenue would be returned to Americans on an equal and monthly basis via dividend checks, direct deposits or contributions to their individual retirement accounts. There would be border adjustments to ensure fair trade,.
The plan also includes calls for “regulatory simplification.” That would include " an end to federal and state tort liability for emitters," a controversial clause that would end lawsuits attempting to hold oil companies liable for damages caused by climate change.
Mark McKinnon, a senior adviser to Americans for Carbon Dividends, said ExxonMobil’s contribution was “a watershed moment,” and he expected that “with their participation, you’ll see a lot of other corporations who have been closely watching this process decide the time is right for them to lend their support, as well.” McKinnon is a veteran political consultant who worked for President George W. Bush.
The size of the donation isn’t large by ExxonMobil standards. The company spends that much on its capital investment program every 20 minutes or so. And a carbon tax faces widespread opposition in Congress.
Nonetheless, ExxonMobil is the most powerful member of the American Petroleum Institute, which has opposed the carbon tax.
“Look at how we got where we are today as the world leaders in carbon reduction. It wasn’t through government mandate, it wasn’t through a carbon tax, it wasn’t through any directive,” former API president Jack Gerard said in 2015. “It was primarily driven by market forces within a context of all-of-the-above [energy].”
In the past, ExxonMobil has been criticized for its support of other organizations that cast doubt on climate science, most notably the Competitive Enterprise Institute.
Former senator John Breaux, who has been lobbying for the tax-and-dividend plan, said that “when you have members making individual decisions, sometimes that also influences the association.”
Breaux said that while there has been little public support among lawmakers for the tax-and-dividend plan, in private there is bipartisan support. He said ExxonMobil’s backing was the most important step in building support since President Trump announced that the United States would withdraw from the Paris international climate accord.
Other companies supporting the plan include Exelon, BP, First Solar, General Motors, Shell, Total and PepsiCo.