Exelon, First Solar Bankroll Campaign to Push a Carbon Tax
(Bloomberg) -- Major energy companies, including the largest U.S. nuclear power generator, are putting millions of dollars into a new political campaign to push for a tax on carbon dioxide emissions -- a measure President Donald Trump has said he opposes.
Exelon Corp., is giving $1 million toward the cause, joining renewable power manufacturer First Solar Inc. and the American Wind Energy Association in helping underwrite the nonprofit organization. Some companies that back the underlying plan, including Exxon Mobil Corp., are considering donating to the new effort, according to people familiar with the campaign who asked not to be named to discuss fundraising efforts.
The campaign, dubbed Americans for Carbon Dividends, aims to bolster a carbon tax-and-dividend plan advanced by prominent Republicans a year ago, using more aggressive lobbying and advertising to line up support with hopes of winning congressional passage after the 2020 elections.
The initiative will be run by two former senators: Democrat John Breaux and Republican Trent Lott. Top political consultants and strategists, including White House veterans Mark McKinnon, Karen Hughes and Joe Lockhart, are advising the campaign.
Two former Federal Reserve chairmen, Janet Yellen and Ben Bernanke, also are signing on as members of the Climate Leadership Council, the not-for-profit advocacy group that developed the underlying carbon tax-and-dividend plan.
The new group represents the most serious effort in years to influence the U.S. debate over climate policy and appeal to Republicans who have been reluctant to put a price on carbon dioxide emissions that drive global warming.
Trump said he opposed taxing greenhouse gas emissions while campaigning for the White House. And the Republican-led House approved a resolution condemning the very idea in June 2016. Still, it aligns with the desires of some oil companies that favor a carbon fee as a predictable way to tackle greenhouse-gas emissions.
There are signs that Republican sentiment is changing, with younger party members clamoring for action, said Ted Halstead, chief executive of the Climate Leadership Council. He cited a recent poll of 2,000 likely voters conducted for the group that showed 71 percent of moderate Republicans agree the government should take action to limit emissions. And in Congress, more than three dozen Republicans have signed on to the Climate Solutions Caucus.
“There are all kinds of indications that the tide is turning,” Halstead said. “Sooner or later, I think everybody realizes that the Republican Party needs to lead on this issue. So we’re teeing this up for when that tidal change comes.”
Exelon, the nation’s largest generator of carbon-free nuclear power, stands to benefit from policies encouraging low- and no-emission energy. Exelon was one of the members of the U.S. Climate Action Partnership, the last big broad corporate push for legislation addressing carbon dioxide emissions. Related congressional efforts faltered in 2010.
Policy makers are excited “about the potential to make progress here,” said Kathleen Barron, Exelon’s senior vice president of federal regulatory affairs and wholesale market policy. “It’s been 10 years since we’ve had the opportunity to really engage on the Hill on a climate policy that we think has a good chance of getting across the finish line and breaking through the gridlock.”
The new political group is organized under section 501(c)(4) of the tax code, freeing it to run paid advertising, lobby policy makers and conduct aggressive social and digital campaigns with the aim of building support for the carbon tax plan. The group doesn’t plan to be active in this November’s elections but organizers envision doing so in 2020.
The proposed carbon tax aims to increase the cost of energy derived from oil, natural gas and coal, thereby discouraging the use of those fossil fuels and encouraging the free market to develop low-carbon power alternatives.
Under the Climate Leadership Council’s blueprint, every ton of carbon dioxide would be hit with a $40 tax, with the price rising over time and revenue redistributed to households in the form of quarterly dividend checks. In exchange, regulations aimed at cutting carbon dioxide emissions -- and much of the Environmental Protection Agency’s authority to regulate them -- would be eliminated.
Companies that emit greenhouse gas emissions also could win liability protection insulating them from litigation over the costs of climate change -- a potentially enticing sweetener as lawsuits mount.
The Latest From BI: Energy Sector May See State Level Carbon Taxes
Squads of top political consultants and operatives are pushing the plan. Dewey Square Group has been tapped to run grassroots political operations, and Hill+Knowlton Strategies will spearhead public relations. Breaux and Lott, with Squire Patton Boggs, are the campaign’s top lobbyists.
The campaign has enlisted former aides to President George W. Bush, including political strategist McKinnon and the former president’s onetime counselor, Hughes, now a worldwide vice chair at Burson-Marsteller LLC. Lockhart, a White House press secretary under President Bill Clinton, also has joined as a senior adviser. Veteran Republican fundraiser Margaret Lauderback will seek more underwriters.
Supporters tout the proposal as a market-based approach to combat climate change that would replace an onerous, unpredictable regulatory regime -- and could drive even more robust carbon dioxide reductions. Exxon Mobil, BP Plc, Royal Dutch Shell Plc and Total SA publicly backed the plan last June, joining consumer products companies and General Motors Co.
“Our deal is based on a grand bargain that you trade a robust and rising carbon tax for significant relief when it comes to carbon regulation,” Halstead said. “This is a way to build bipartisan and popular support for that.”
Michael R. Bloomberg, founder of Bloomberg LP, which operates Bloomberg News, is an individual founding member of the Climate Leadership Council, but neither he nor Bloomberg Philanthropies has provided any funding to the organization.
The new effort was cheered by other conservatives pushing a carbon tax policy. Alex Flint, executive director of the Alliance for Market Solutions, said economists’ support for the approach should hold sway with congressional Republicans, who "are still in the early stages of accepting a carbon tax as the conservative solution to climate change."
Republican ‘Rich Kids’
Critics say the proposed tax would punish users of natural gas, oil and coal that make up the vast majority of the energy consumed in the U.S. today.
“Nothing would slam the brakes on this economy faster than a carbon tax,” said Dan Eberhart, the chief executive officer of Canary LLC, a Colorado-based drilling-services company. “We need affordable and reliable energy, and the tax structure is already set up to penalize oil and gas and promote renewable energy.”
Mike McKenna, a Republican energy strategist, said “this effort to tax energy will make people poorer, diminish the nation and have no material effect on the purported problem.”
“But,” he added, “the rich kids who used to run the Republican Party don’t really care about that.”
©2018 Bloomberg L.P.