Fossil fuel giants BP and Shell had “numerous opportunities” to privately influence proposals to tax oil and gas companies which were then backed by the government, new documents reveal.
Internal BP emails show its British executives were reassured by a controversial oil industry group that they could “shape [the] internal thinking” from a 2018 report on carbon taxes produced by the right-wing think tank Policy Exchange.
The emails were among hundreds of documents released last week by a powerful committee of U.S. politicians as part of its three-year investigation into how the oil industry worked to undermine efforts to combat climate change.
Policy Exchange has been credited by Prime Minister Rishi Sunak with helping to draft laws cracking down on climate protests and has in the past received money from oil and gas major ExxonMobil.
The think tank was commissioned to produce a report on carbon pricing by the Climate Leadership Council (CLC), a controversial US non-profit whose “founding members” include BP, Shell and TotalEnergies, car makers Ford and General Motors as well as multinationals like Unilever and Microsoft.
The think tank’s recommendations largely mirrored the CLC’s proposal to increase the tax on carbon emissions, a controversial idea that has been accused of being a favored policy of the fossil fuel industry. The report also proposes that several UK environmental regulations should be phased out to reduce the “burden on businesses”.
The United Kingdom has taxed carbon emissions since 2005, first as part of an emissions trading system created by the European Union.
The system works by setting a maximum overall cap on the amount of carbon emissions that the energy and manufacturing industries can emit. Polluters receive allowances that allow them to emit only a defined quota of carbon; if they exceed their limits, they can be fined. To avoid being punished, companies can buy additional allowances from other companies that have excess allowances because their emissions are below their quota.
Every year the EU reduces the overall emissions cap, meaning the price of allowances – also known as the carbon price – rises, which the bloc says acts as an incentive to reduce emissions.
However, according to Bill McGuire, Emeritus Professor of Geophysical and Climate Risks at UCL, the policy is popular among oil and gas companies.
“Paying a carbon tax is better than stopping all exploration, keeping fossil fuels in the ground and changing economic models to embrace renewable energy – which is necessary – and they have obviously arrived at the conclusion that, given their colossal profits, it is the right thing to do. they can easily manage,” he said.
After the UK left the EU in 2016, the UK government began developing its own replacement emissions trading system, which the Policy Exchange report sought to influence.
The report was cited last December in a policy paper on the government’s new long-term emissions trading scheme, used to justify the claim that “carbon pricing is an effective way, market-based, to enable businesses to make economically rational decarbonization investment decisions. »
Policy Exchange acknowledged at the time that the report was financially supported by the CLC, which presented itself as a “strategic partner”. However, the think tank said it was “not intended to represent the views of the council or its founding members on matters relating to the UK or EU”.
Internal BP emails reveal that bosses at the British oil company were initially alarmed that the CLC had commissioned the report and requested a meeting with the council’s founder.
According to the emails, BP was able to use this meeting to outline “various potential policy, political and commercial concerns” regarding the contents of the report, given the company’s “unique position in the UK and timing”.
After the meeting, Paul Jefferiss, then head of BP group policy, reassured Andrew Mennear, BP’s director of UK government affairs, that “I don’t think there is any cause for concern in the ‘immediate “.
Jefferiss noted that “UK-focused CLC members (BP, Shell, Unilever) will have ample opportunity to provide their views and shape the internal thinking” of the report before its publication.
BP also appears to have been offered the opportunity to work with the council on a communications strategy around its exit.
Jolyon Maugham, director of the Good Law Project, said: “While the BBC dismisses Policy Exchange as ‘centre-right’ and the so-called charity regulator stands idly by, the revealed reality is that Policy Exchange is acting as a front for the oil and gas industry.
Policy Exchange, the CTC and BP have been contacted for comment.
“Another form of greenwashing”
Climate experts are divided on the effectiveness of carbon tax policy, and past scandals have led to accusations that it is used as a smokescreen by the fossil fuel industry.
McGuire believes that a carbon tax is “ultimately just another form of greenwashing and an excuse for the greater good.” [oil] industry critics.
However, other experts, such as Adam Bell, policy director at consultancy Stonehaven and former head of strategy at the Department for Business, Energy and Industrial Strategy, believe carbon taxation can be effective.
“Carbon pricing can only be one part of a policy approach to tackling climate change; it cannot constitute a solution in itself. Fossil fuel companies will survive as long as there is demand for what they produce. You need to eliminate this request if you want to eliminate them.
To do this, you need to “focus on building renewable energy and electrifying heating systems and transportation,” he said.
The CLC has led calls for a federal carbon price in the United States and has drawn criticism in the past for attaching conditions to its proposals that would be favorable to the fossil fuel industry. He has previously proposed repealing federal emissions regulations, stripping the Environmental Protection Agency (EPA) of its authority to regulate carbon emissions, and providing legal immunity for corporations from prosecution. for their role in climate change.
The CLC removed the latter provision from its proposal in 2019 because it “distracted attention from the plan’s many economic and environmental benefits,” but critics questioned whether it remained privately committed to the idea.
In 2021, the CLC “suspended” Exxon from its list of founding members after one of its lobbyists was filmed saying that the oil company had only pledged to support a carbon tax because it was unlikely to become law.
The Policy Exchange report also proposes that certain environmental regulations “be phased out, thereby reducing the regulatory burden on businesses” after the introduction of a carbon tax, while asserting that “this will in no way reduce the protection of the environment “.
In the report’s afterword, CTC founder Ted Halstead, along with Martin Feldstein and George P. Shultz, two economists who served in the Ronald Reagan administration, wrote that the plan “will help free businesses from unnecessary regulation.
Steve Tooze, spokesperson for Extinction Rebellion, said: “These emails are the smoking gun that blows fatal holes in Policy Exchange’s already tattered and frankly laughable claims to be an independent research ‘think tank’ “.
Policy exchange
At the 2022 Conservative Party conference, Jacob Rees-Mogg, then business, energy and industrial strategy secretary, said: “I believe that where Policy Exchange leads, governments have often followed. »
The think tank, which has charitable status, has chosen not to disclose its donors and has been given the lowest possible ranking by Who Funds You? project, which assesses the transparency of think tank funding.
OpenDemocracy previously discovered that Exxon donated $30,000 to Policy Exchange’s US fundraising arm in 2017, the same year its report on UK carbon pricing was being written.
The think tank would then write a report in 2019 proposing new, tougher police laws to crack down on climate protesters. Rishi Sunak later credited Policy Exchange with helping the government draft what would become the Police, Crime, Sentencing and Courts Act, which explicitly targeted groups like Extinction Rebellion.
Sunak is an alumnus of Policy Exchange, where he worked before his election to Parliament in 2015, as is Claire Coutinho, his energy security and net zero secretary. The think tank has significant access to ministers, having held over a hundred meetings with the government since 2012.
DeSmog revealed in August 2023 that Policy Exchange had engaged in a high-level influence campaign over the UK’s North Sea oil and gas policies, and had echoed the fossil fuel lobby in highlighting the importance of hydrogen energy and carbon capture and storage (CCUS) utilization and storage for the green transition.
Evidence uncovered by US politicians further demonstrated how fossil fuel giants are downplaying the climate crisis and lobbying against green laws, despite having academic research showing the scale of the problem.
BP was warned by Princeton University researchers in 2016 that climate change accelerated in part by the world’s new shale gas reserves could lead to catastrophic events such as “mass extinctions and unprecedented famine.”
Yet despite internally acknowledging that “gas does not support climate goals,” the company embarked on a marketing campaign to “advance and protect the role of gas – and BP – in the energy transition”.
