Major oil companies and other leading American corporations are backing a carbon "tax and dividend" plan that is being proposed by some elder statesmen of the Republican Party as the "most efficient and effective way" to tackle climate change.
U.S. President Donald Trump and the current Republican leadership in Congress have shown no interest in advancing climate-change policy, but supporters of the Carbon Leadership Coalition say it is laying the groundwork for future policy decisions in Washington.
The coalition includes oil giants – Exxon Mobil Corp., Royal Dutch Shell PLC and BP PLC – as well as General Motors Co., and consumer products companies such as Unilever Group, Procter & Gamble Co. and PepsiCo Inc.
The tax-and-dividend plan was co-authored by George Shultz and James Baker – who were prominent cabinet secretaries under presidents Ronald Reagan and George H.W. Bush. It is backed by a number of prominent business leaders, including former New York mayor Michael Bloomberg and former Wal-Mart chairman Rob Walton, as well as by a bipartisan group of political leaders.
"Economists are nearly unanimous in their belief that a carbon tax is the most efficient and effective way to reduce carbon emissions," the group said in a statement on Tuesday. The proposed tax would send "a powerful signal to businesses and consumers, while generating revenue to reward Americans for decreasing their collective carbon footprint."
The coalition calls for the introduction of a carbon tax, starting at $40 (U.S.) a tonne of carbon dioxide emissions and rising steadily. All the revenue would be redistributed back to Americans in the form of a "dividend," which at $40 a tonne would average $2,000 for a family of four and would rise in line with the levy. A recent study by the U.S. Treasury Department concluded a carbon "tax and dividend" plan would yield the most benefit to lower-income Americans.
The group also argues that a rising carbon price would allow for the elimination of less efficient regulations aimed at cutting greenhouse gas emissions, including former president Barack Obama's clean-power plan aimed at the electricity sector.
Its high-profile intervention comes at a critical time in global climate-change debate. Earlier this month, Mr. Trump announced his intention to withdraw from the Paris climate-change accord, while he and Republicans in Congress roll back regulations imposed by Mr. Obama and question the validity of climate science.
"We recognize the current Congress is not likely to take up this proposal," said Kevin Kennedy, of the Washington-based World Resources Institute, which is a partner with the coalition. "This is a medium-term effort. We need to find ways of changing the current dynamic and changing the debate."
Prime Minister Justin Trudeau and several provincial premiers are plowing ahead with Canadian carbon-pricing plans, including a federal levy that would be imposed on provinces that do not have a carbon levy in place.
The federal Liberals are considering a plan to rebate any revenue collected back to taxpayers in the respective province, similar to the proposal put forward by the U.S. coalition. However, Mr. Trudeau is facing angry opposition from Saskatchewan Premier Brad Wall and federal Conservative Party MPs, who argue the carbon levy would hurt the economy.
Large oil companies, including Suncor Energy Inc. and Cenovus Energy Inc., as well as other major corporations in Canada, support carbon-pricing plans as preferable to more cumbersome regulatory approaches.
However, some business leaders warn governments need to proceed cautiously to ensure the Canadian economy is not harmed, particularly given the policy reversal under Mr. Trump, that could reduce costs for U.S. business and undercut the competitiveness of their Canadian rivals.
The American coalition proposes that, as part of any tax-and-dividend plan, Washington should impose a "carbon border adjustment," which would impose tariffs against countries that don't have equivalent climate-change policies.