The U.S. oil and gas industry’s main lobbying body is preparing to back a carbon pricing system, according to the Wall Street Journal.
The WSJ reported that the American Petroleum Institute (API) is poised to release a statement saying that the industry pressure group backs “economy-wide carbon pricing” as the main government instrument to lower carbon emissions, “instead of mandates or prescriptive regulatory action.”
The move comes as the Biden administration increasingly zeroes in on methods for pricing, or taxing, carbon, while stopping short of announcing a full government policy. On Monday, the administration said it would consider a “carbon border tax” for imports; on Friday, Biden’s team said it would boost the number it uses to assess the “social cost” of carbon to $51 per ton of CO2.
The API has not publicly commented on the report and has not yet responded to a request for comment from Fortune.
Based in Washington, D.C., the API has 600 members across the American oil and gas industry, and includes in its membership BP and Shell, as well as Exxon Mobil, Chevron, and Equinor.
A shift toward backing carbon pricing would mark a transition for the API, which has staunchly opposed the policy in the past, even as giants of American business, and even oil and gas majors elsewhere, have come out in favor of putting a price on carbon.
Carbon pricing covers several options for incentivizing companies to use less carbon, including a cap-and-trade system. It can include, but is not limited to, an outright carbon tax—which is a government-set price applied per ton of carbon dioxide that a company’s operations emit. The idea is far from new; it’s been doing the rounds in Washington since at least the early 1990s, as a market-friendly alternative to industry-specific regulation or subsidies aimed at addressing climate change.
The API’s draft stops short of explicitly recommending a carbon tax or specific price mechanism, the WSJ reported.
In recent years, carbon pricing as a whole has been gaining increased backing from mainstream American companies and economists. The Climate Leadership Council, a bipartisan group that supports a carbon pricing solution for lowering emissions, includes backers from IBM to Goldman Sachs to Exxon Mobil and Shell, as well as four former chairs of the Federal Reserve.
That momentum appears to be growing. Within the oil and gas sector, a raft of primarily European majors, BP and Shell among them, have committed to net-zero emissions by 2050 and have backed carbon pricing, which is already in place in many countries. In January, the U.S. Chamber of Commerce also said it would support a “market-based approach” to reducing emissions—i.e., carbon pricing.
The announcement, if confirmed, would come after French energy giant Total publicly broke from the group, saying earlier this year it would not renew its membership in the API. The company cited differences on how it was addressing climate change, and specifically mentioned differences on carbon pricing—which, Total says, is a necessity—as some of its main reasons.
More must-read stories from Fortune:
- Pfizer’s extra vaccine dose was supposed to be a miracle. It’s now a mess
- India’s COVID vaccine maker was supposed to supply the world. Now those plans are delayed
- When will $400 weekly federal unemployment benefits get passed? Here’s everything to know
- “The bears are getting louder”: These indicators are signaling a stock market pullback
- These 5 companies are now the highest-valued U.S. unicorns in 2021
