Occidental Petroleum Corp. has split from some of its larger rivals by rejecting a potential U.S. carbon tax, saying that it prefers the existing system of tax credits designed to encourage oil companies to store carbon dioxide and reduce emissions.
The position appears to stand in contrast with that of supermajors like Exxon Mobil Corp. and the American Petroleum Institute industry group, which voted last month to endorse putting a tax or other price on carbon dioxide emissions to replace other greenhouse gas regulations. Independent producers and refiners have long been opposed to such a levy.
“A carbon tax would be bad for a lot of the industry, a carbon tax would be bad for the consumers and especially for those consumers who are more disadvantaged from an economic standpoint,” Occidental chief executive officer Vicki Hollub said at a conference hosted by Texas Independent Producers & Royalty Owners Association Tuesday. “A carbon tax is not what we’re pushing at all.”
Occidental has attempted to position itself as one of America’s more climate-forward oil producers, making its opposition to a carbon tax more noteworthy. The Houston-based company was the first large U.S. oil producer to announce a goal to reach net-zero carbon emissions by mid-century and has ambitious plans to build in Texas the world’s biggest facility to store carbon captured directly from the atmosphere.
Last month, API said its support for a carbon tax hinges on replacing existing regulations on greenhouse gases – a trade-off seen as key to luring support from Republicans on Capitol Hill. But Occidental’s CEO sees such a measure as punitive for the industry.
Instead, Hollub prefers the 45Q tax structure that gives companies credit for capturing carbon and storing it underground. She also praised California for its low-carbon fuel standards, saying they functioned better than Europe’s policy of limiting emissions and trading allowances.
“We in Texas kind of criticize California a bit,” but the state is “addressing carbon the right way,” Hollub said. California’s fuel standards, along with the 45Q carbon storage tax credit, is “incentivizing the use of technology and rewarding the use of technology,” she said.
President Joe Biden made clean energy a key pledge in his election campaign last year and took the oil industry by surprise in the first months of his presidency by canceling the Keystone XL crude pipeline and restricting drilling on federal land.
Oil producers must provide palatable options for the Biden administration or risk having “extreme measures” forced upon them, Hollub said.
“In the absence of a good plan on how to continue to lower emissions from the existing production that we have in the U.S., President Biden and his administration are going to feel forced to do something on their own,” she said. “And I think that something would be to further limit leasing on federal lands. There could be a production impact.”
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