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Exxon CEO Tillerson's Argument For a Carbon Tax

Exxon Mobil Chairman and CEO Rex Tillerson renewed his push for a straight tax on greenhouse gas emissions in a speech last night, touting the benefits of a plan that would give companies a predictable cost and keep the government from picking energy winners and losers.

The head of the world's largest publicly trade company has been on the pro-carbon tax circuit for at least two years now. For many folks, including environmentalists and policymakers, Tillerson lacks credibility.

It's not so much that he leads the largest energy company in the U.S. It has more to do with the company's active denial of climate change -- a stance it has since backed away from a little bit.

Putting Exxon's past aside, for a moment, what about a carbon tax? Is it a better alternative and would it be worth pursuing here in the U.S.?

To manage the risks of climate change, Tillerson said, the most effective policy will:

  • have a predictable cost for emissions;
  • allow markets to select best emission-reduction methods through investments and technology;
  • simple government oversight structure;
  • maximize cost transparency;
  • encourage global participation
Tillerson argues a carbon tax meets the "effective policy" requirements laid out above. And a cap-and-trade plan would essentially do the opposite, including the creation of volatile markets that would undermine the ability to invest in advanced technologies.

Certainly, many economists have supported a carbon tax as well. But is this all too little, too late?

Tillerson doesn't seem to think so.

"I firmly believe it is not too late for Congress to consider a carbon tax as the better policy approach for addressing the risks of climate. Indeed, there has never been a more opportune time for Congress to pursue this course of action."
But if Congress came up with a climate change policy built on a carbon tax, would Exxon support it?

Image of Exxon CEO Rex Tillerson from Exxon