American Petroleum Institute backs a price on carbon

petroleum carbon price

American Petroleum Institute backs a price on carbon

By Gwyneth Lonergan

The American Petroleum Institute (API), the nation’s largest trade group for the oil and gas industry, endorsed carbon pricing last week as part of their new climate action framework. The March 25 announcement came after a draft statement was released and reported by the Wall Street Journal earlier in the month. In anticipation of the official statement, CCL’s Senior Business Relations Representative Kyle Kammien told InsideClimate News that API’s “new position should send a clear signal to Congress that a carbon price is a durable, bipartisan climate solution that is good for people, business, and the planet.” 

While the statement does not endorse a specific policy, API’s position is a useful addition to the momentum for carbon pricing legislation. It also represents a major shift from API’s previous position on climate action. President and CEO of API Mike Sommers said, “As our industry accelerates efforts to advance groundbreaking technologies, reduce emissions and drive transparent and consistent climate reporting, we urge lawmakers to support market-based policies that foster innovation, including carbon pricing.”

CCL’s Team OIL weighs in

We went to CCL’s Team OIL (“Oil Industry Liaisons”) to see what they had to say about the major shift from the trade group. Team OIL co-lead Charles Gabrys is a conservative CCLer who has long supported carbon pricing policies, and particularly the carbon fee-and-dividend model. The move by API only reinforces Charles’ position. 

Charles believes API’s new position will have a big influence on the rest of the business community. He explains the logic behind this, saying, “If any economic actor will be harmed by carbon pricing, it must be petroleum producers. If they can transition and survive through a steadily rising carbon price, then almost any other economic sector ought to be able to.” In other words, if the oil and gas industry itself says they can adapt to a clean-energy future with a carbon price in place, then every other business should be confident that they can adapt, too. Charles adds, “If they say a carbon price will make the transition easiest for them, then let’s give it to them.

Team OIL even played a small part in raising the issue of carbon pricing to the influential industry group. Team OIL co-lead Larry Kremer held several meetings with API members over the last few years to discuss market-based emission reduction strategies. Six years and several conversations later, Larry is excited to see API take this next step.

Read more about CCL’s Team OIL in this 2018 article published in The Guardian!

API’s position and CCL’s path forward

Beyond Team OIL, other groups’ reactions to API’s position spanned a broad range. Some have expressed skepticism about the position, pointing out the industry’s past actions lobbying against climate policy, or expecting that the industry will only support a low or ineffective price. That just underscores the value of our advocacy in CCL — thousands of grassroots advocates are pushing for a steadily rising price that will be effective at reducing emissions.

Other groups have responded positively to API’s position. President of the Bipartisan Policy Center Jason Grumet said, “API’s new support for federal legislation to accelerate the development and commercialization of clean technologies and reduce emissions could be a turning point in the national climate debate.”

Members of Congress are likely to see this change as significant, partially because it’s the latest in a long line of major business groups endorsing market-based solutions to reduce carbon emissions. Earlier this year, the U.S. Chamber of Commerce voiced its support of a market-based approach. In September of 2020, Business Roundtable, a lobbying group of CEOs from America’s largest companies, endorsed carbon pricing. Chairman Doug McMillon of Walmart described a market-based emissions reduction policy as “critical” to reducing greenhouse gas emissions and mitigating the effects of climate change. 

When placed in this context of increasing carbon pricing support, API’s statement carries real potential. The endorsement could positively impact the relationships CCL volunteers are building in Congress — with conservative members especially — and provides a great opportunity for volunteers to educate about the variety of benefits the Energy Innovation and Carbon Dividend Act or other carbon pricing legislation would bring.

Charles says, “The suite of climate statements from API, US Climate Finance Working Group, Chamber of Commerce, and the Commodity Futures Trading Commission should make a broader range of Republicans take note of carbon pricing.” Then, he says, it is up to CCLers to come in and show why a policy like the Energy Innovation Act is a good implementation of the type of market-based solutions these groups want to see.

Gwyneth Lonergan is a communications intern for CCL and a senior at Wake Forest University pursuing a BA in Politics & International Affairs.