The U.S. Chamber of Commerce just issued its new energy plan, an update to its 2008 plan. The 2008 document was favorable to hydrocarbons, but it included a call for reducing the environmental impact of energy consumption and investing more in climate science, as well as a call for the U.S. to lead on climate change.
The new plan, not so much. In fact, not at all. And why not? Well, Karen Harbert, CEO of the Chamber’s Institute for 21st Century Energy: “It is a different world in 2014 than it [was] in 2008: We are dealing from a hand of strength.”
At least she’s honest.
But it is strange, considering as the New York Times let the cat out of the bag: the big energy companies all assume a price on carbon emissions when assessing new projects. If the projects don’t make sense with a carbon price, then they don’t happen. In other words, they all assume a carbon tax, cap-and-trade system, or costly command-and-control regulation is coming.
But none of them want to admit that they plan for a carbon price! One colleague of mine recently completed a case on a large hydrocarbon project. The company refuses to release the case unless he removes all references to the fact that the company builds a carbon price into all its financial analyses ... even though the cat is out of the bag on the fact that all the major energy companies (and a lot of other ones) do just that.
WTF, you may ask? Well, the answer is simple. The Times is incorrect when it writes that the use of carbon pricing in boardrooms is part of “a deeper rift in the [Republican] party, as business-friendly establishment Republicans clash with the Tea Party.” It is not.
Rather, it represents the fact that the energy companies do not believe that the odds are against then in the fight against carbon emission restrictions ... but that they also believe that there is a chance that they win. Publicizing their internal use of a carbon price gives aid to their enemies who want to impose one. But ignoring the likelihood that one is coming will only hurt their shareholders. Thus, they build one in.
The similarity to the quiet rooms in which Mitt Romney believed that income inequality should be discussed is not a coincidence.
P.S. One implication that should not be drawn, however, is that a carbon price (or regulation) won’t affect CO2 production if companies are already taking it into account. There are two reasons why it will still matter. (1) The big companies aren’t the only CO2 emitters. (2) The big companies will only invest if the projects make sense with a carbon price; nonetheless, those projects will produce less if carbon prices or regulation raise the cost of their product.