BP Claims to Support Taxing Carbon, but It’s Spending $13 Million Against an Initiative That Would Do Just That

BP has been bullish about putting a price on carbon. The oil giant was one of six companies to call on governments around the world to adopt a global price on carbon in the lead-up to the Paris climate talks in 2015. Toward that end, it’s part of the Carbon Pricing Leadership Coalition, as well as a founding member of the Climate Leadership Council, or CLC, which hopes to place a $40-per-ton price on carbon in the U.S.

The company even has a whole webpage devoted to the topic. “We believe that carbon pricing provides the right incentives for everyone — energy producers and consumers alike — to play their part in reducing emissions,” the page reads.

So why is BP spending $13 million to defeat a measure to set a carbon price in Washington state?

The “Carbon Emissions Fee Measure,” known as ballot Initiative 1631, would leverage a $15 fee on every ton of carbon dioxide produced in the state, to be scaled up by $2 per ton every year until maxing out at around $55 in 2035, depending on inflation. Revenue from the fee would be invested in building up low-carbon infrastructure, forestry programs, and green jobs. The initiative would also set an overall goal of reducing emissions by 2035 to 40 percent below what they were in 2014. If that target isn’t reached, the price will continue to rise.

This would be the first statewide carbon tax-like measure in the country and a bellwether for climate policy nationwide, flanked with potential wins on other climate-focused ballot initiatives in Arizona (to increase the state’s renewable portfolio standard) and Nevada (to prohibit electric utility monopolies). Another measure to ban new drilling within a half-mile of homes and schools in Colorado has provoked industry pushback as well, as the state’s oil and gas industry champions its own countermeasure, a constitutional amendment that would allow them to sue state governments over any regulations that infringe on their profits.

With talk of a Green New Deal circulating among left-leaning and insurgent candidates at the federal level, I-1613 — a product of the state’s climate and environmental justice groups, which have emphasized job creation — is one of several ballot initiatives that could send a signal to D.C. as to what types of climate proposals are likely to gain steam once Democrats are able to push through legislation. In no other state, though, is the industry fighting a policy it theoretically supports.

Overall, the oil industry has spent over $28 million to stop I-1631 — making it the most expensive Washington statewide ballot initiative in history — and is blanketing airwaves with ads urging voters to reject it. In a letter to state Rep. Joe Fitzgibbon, BP Cherry Point refinery manager Robert K. Allendorfer explained his company’s opposition. After enumerating BP’s commitment to fighting climate change and to a “well-designed carbon pricing framework,” Allendorfer’s missive — sent to The Intercept by BP spokesperson Jason Ryan — lays out a three-point bill of particulars as to precisely what’s so wrong with I-1631.

In his first and third points, Allendorfer does not reveal much. Some climate hawks may even agree with his first gripe: that I-1631, which would cover about 80 percent of the state’s emissions, will exempt some of the state’s largest industrial polluters, particularly those that are most exposed to international trade like Boeing. The third includes vague, boilerplate language on how passing I-1631 would make “creating a successful carbon pricing program much more difficult.”

But it’s the second reason that makes clear the real difference between the oil and gas industry’s vision for a carbon price and what’s on the ballot in Washington. I-1631 “would fail to preempt other state and local carbon regulations,” Allendorfer wrote, meaning that it would not also peel away environmental standards or infringe on state agencies’ ability to enforce them as an olive branch to industry. As such, the measure would “thereby [jeopardize] thousands of Washington jobs.” In the following paragraph, Allendorfer noted that BP supports more than 9,600 jobs in the state, as if to issue a thinly veiled threat: It’d be a shame if something happened to them.

The CLC proposal for a $40-per-ton price for carbon that BP supports — though far higher than the $15-per-ton starting fee in I-1631 — would kneecap the federal government’s ability to regulate carbon emissions. In a recent op-ed, former Federal Reserve Chair Janet Yellen and CLC Executive Director Ted Halstead admitted that the plan is based on a series of concessions. Those “grand bargains,” they wrote, include “trading a robust and rising carbon price for regulatory relief. … Its effectiveness in reducing emissions justifies the phase-out of other carbon regulations that are far more intrusive.” Conveniently, for the industry at least, the CLC proposal would also exempt fossil fuel companies from climate liability lawsuits, like the one New York Attorney General Barbara Underwood recently brought against Exxon Mobil, another founding CLC member and member of the American Fuel and Petrochemical Manufacturers, which has thrown $1 million into the fight against I-1631.

Yellen and Halstead’s stated goal is to rein in carbon emissions even past the target set by the Paris agreement, but there’s little reason to suspect a market-based measure like a carbon tax could effectively do that on its own. Even the CLC’s higher price still falls well below the prices already factored into the climate models compiled by the Intergovernmental Panel on Climate Change in its most recent report laying out pathways to limiting global warming to 1.5 degrees Celsius, which range from $135 to $5,500. “Market-based instruments are, in our view, a necessary condition that allow you to have decisions made in an efficient way,” John Roome, senior director for climate change at the World Bank, told me this summer when asked about the European Union’s Emissions Trading System. “But they’re generally not sufficient. So you cannot just rely on market-based mechanisms by themselves.” He noted, however, that different governments should select their own balance of market-based and regulatory measures.

Even I-1631’s ultimate price of $55 per ton is modest relative to the potential climate catastrophe we face, but this is a fact that the measure’s backers, including Washington state Gov. Jay Inslee, are honest about. To them, I-1631’s potential to reduce emissions lies in the sizable investments it would fund for green infrastructure, scaling up renewables and other low-carbon efforts. All of the revenue generated by the fee — around $1 billion per year, all told — would be invested in green projects, allocated into three buckets: “clean air and clean energy” (70 percent of funds), “clean water and healthy forests” (25 percent), and “healthy communities” (5 percent). Within those categories, there are significant funds set aside for job creation, to help transition workers out of the fossil fuel industry, for projects approved by the state’s indigenous communities, and to help mitigate any financial burden of the fee on low-income energy consumers. The campaign website features a detailed map of projects around the state that revenue could be put toward.

I-1631 would also create a new statewide body to oversee progress toward meeting the overall emissions reduction goal. The Public Oversight Board would comprise 42 members appointed by the governor. Fifteen of them would have voting power, while nine members representing stakeholders from each of the three funding buckets would play advisory roles. The board would be similar to the California Air Resources Board, which has significant authority under the state’s climate legislation to spearhead emissions reductions and has been credited with much of the state’s progress on that front. (For more details on the mechanics behind I-1631, David Roberts at Vox and Kristin Eberhard of the Seattle-based Sightline Institute, a think tank, have each written useful explainers.)

The stakes for I-1631 are high, as this is the third time in two years that the state will decide whether to pass some sort of price on carbon. The first opportunity came in 2016, when voters overwhelmingly voted down Initiative 732, a so-called revenue-neutral tax of $15 per ton of carbon that would have scaled up more quickly and eventually topped out at $100 a ton. Industry largely sat out that fight, pouring just $260,000 into an opposition campaign. The groups backing I-1631 and several national groups mounted a more sizable opposition, citing (among other things) I-732’s lack of attention to and consultation with Washington’s progressive and environmental justice groups. Rather than using revenue to fund investments in communities around the state, that measure would have cut sales taxes and bolstered the state’s working families tax rebate. The second attempt at a carbon price came in March, when an Inslee-backed carbon-pricing bill failed to make it through the legislature, withdrawn after lawmakers realized that it would fall short of passing by “one or two” votes.

Diver Kim Thomas holds a “Yes on 1631” sign as she dives at the Seattle Aquarium during an event to endorse Initiative 1631 by the aquarium and the Woodland Park Zoo on Oct. 25, 2018.

BP isn’t alone in its apparently conflicting climate views. The Western States Petroleum Association, a regional oil and gas lobby known as WSPA, advocated for and has repeatedly praised the newest iteration of California’s cap-and-trade system, which passed in 2017 with ample input from WSPA. Owing to that, that measure does pre-empt local regulations on refineries. Rather than having to pay directly for their emissions, the cap-and-trade system further allows industrial polluters to either buy up offsets from various green projects around the country — funding emissions reductions elsewhere to theoretically balance out their own — or trade credits with other companies. Last weekend, WSPA president Catherine Reheis-Boyd praised that measure as a “blueprint for the rest of the world to follow to fight climate change.” But in Washington state, WSPA sat out the fight over the last carbon-pricing initiative, I-732, refusing to take an official position.

“The better path to decreasing greenhouse gas emissions in the state is to reject this ill-conceived initiative,” WSPA media relations manager Kara Siepmann said of I-1631 by email, “and for interested parties to work together on a market-based program that provides real GHG reductions with cost certainty.” She also cited a study from the Koch Brothers-linked Washington Policy Center, which found that I-1631 would raise costs on consumers and industry.

Alongside BP, Koch Industries has been one of the biggest donors to the opposition campaign. Other industry opponents include with Phillips 66, Andeavor (formerly Tesoro), and Valero.

“Yes on 1631,” the broad coalition of groups campaigning for the initiative, has raised $15 million, with support from billionaires Michael Bloomberg and Bill Gates. But the campaign is cash-strapped compared to the opposition, to which industry groups have given more than $28 million.

The campaign has relied less on six-figure donations than on the enormous coalition of climate and environmental justice groups, tribal nations, labor unions, and businesses that worked together to draft the initiative and get it on the ballot. In the last several months, coalition members — organized principally by the Alliance for Jobs and Clean Energy — have been knocking doors, phone banking, and holding public events to get the word out and compel Washingtonians to get to the polls. On Wednesday, supporters of the campaign delivered “awards” to various oil companies around the world — from Houston to Washington, D.C. to London — that have fought I-1631.

I-1631 backers feel more hopeful than they have the last two times around, though no outcome is certain — particularly with the gargantuan amount of corporate cash pouring into the election. A Crosscut/Elway Poll from October found 57 percent of likely voters support the measure, as well as 50 percent of those polled overall. Whatever the outcome, Washington’s climate fight has already carried a lessons for those interested in seeing progressive climate policies passed elsewhere: If you want to get a sense of how much of a threat a given plan will pose to the world’s biggest polluters, looking at who’s funding the opposition might be a good place to start.