The painful climate step

April 23, 2007
ConocoPhillips has adopted a thoughtful approach to climate change that comes up one step short of comprehensive.

ConocoPhillips has adopted a thoughtful approach to climate change that comes up one step short of comprehensive. Room remains for argument about whether the US truly needs the “mandatory national framework to address greenhouse-gas emissions” for which the company declares support. Yet political pressure has intensified to the point that some form of mandatory action seems inevitable. If nothing else, such a move would end the uncertainty now plaguing business decisions. It might even quell the extremism that has made reasoned discussion about a complex issue impossible.

Mandatory action on greenhouse-gas emissions must be thoughtful action. Toward this hope, ConocoPhillips’s Apr. 11 statement sets useful standards.

Avoids alarmism

In general, the statement avoids the alarmism typical of most calls for action on climate change. ConocoPhillips makes no wild claims about melting ice caps, dwindling polar-bear populations, coastal inundation, or malaria plagues. It doesn’t insist that people, as an act of political will, can substantially alter trends in global average temperature. Instead, the ConocoPhillips statement confines itself to the observable increase in greenhouse gases in the atmosphere that has accompanied industrialization. To argue that this increase warrants moderation of emissions, as a precaution against unknown and possibly malign consequences, is sound. And to argue in this manner, confining the discussion to what’s mostly certain and possibly achievable, avoids the all-or-nothing nuttiness of most climate-change debate.

With specifics, too, ConocoPhillips constructs a useful standard for the emissions-reduction framework it espouses. “Any such framework,” said company Chairman and Chief Executive Officer Jim Mulva, “should be transparent, clearly communicate the cost of carbon to consumers, be structured to avoid the volatility of energy prices, and encourage energy efficiency. It also should be paced to match the speed at which technology can be developed and deployed in order to avoid undue impact on the economy, including any impact on the number and location of jobs.” These criteria suggest flexibility and attention to economics. They are more sophisticated than mandatory targets for volumetric cuts in emissions by specific dates-the state-centered approach of the foundering Kyoto Treaty. They are more likely than Kyoto is to produce successful policy.

The step ConocoPhillips didn’t take is a difficult one. But it’s inescapable for any company-such as members of the US Climate Action Partnership, which ConocoPhillips has joined-deciding to support regulation of greenhouse gases. In fact, such companies should take the step sooner rather than later. It’s the only way to assure the transparency, cost visibility, and efficiency upheld by ConocoPhillips.

For oil companies, however, the step requires crossing what should be a painful line. It’s support for a carbon tax. As a matter of principle, companies should be loath to call for new taxation of their customers. Before they do so, they should be certain that societal benefits warrant the economic costs and inevitably frayed trust. Then, in service to honest disclosure, they should make carbon taxation prominent in their greenhouse-gas reduction campaigns.

Contrary to popular propaganda, any major effort to lower greenhouse-gas emission rates will impose costs on people. The climate-change issue has ridden into public acceptance on the back of a colossal bluff, according to which governments can immunize individuals against mitigation costs by aiming directives at companies. This is deceitful. Reducing greenhouse-gas emissions means emitting less carbon dioxide, which means using expensive energy in place of cheaper hydrocarbons. Somebody has to pay the difference. Companies don’t pay such costs. Governments don’t, either. People do.

All options

People, not bureaucrats or companies, should decide how much to pay for greenhouse-gas mitigation. They should be able to accommodate mitigation to affordability. They should have the option to consider other, possibly more-affordable responses to feared warming, such as adaptation. They must have the freedom-scandalously denied so far in climate-change politics-to consider all choices.

First, though, they must know the potential cost. Taxation offers the best illumination. Mitigation without taxation wears too much camouflage. Companies supporting mandatory mitigation therefore must be willing to support new taxes on their customers-and to say so. Anything less is camouflage, too.