Holding Big Carbon Accountable: Response to Severin Borenstein

, former director, California & Western States | December 17, 2013, 9:35 am EDT
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Respected UC Berkeley economist Dr. Severin Borenstein released a blog yesterday that included at least one point we can agree on: fossil fuels are cheap. But Borenstein missed the boat in dismissing significant new research that traces 63 percent of heat-trapping emissions to just 90 institutions, including oil giants Exxon-Mobil, BP, and California-based Chevron, suggesting that holding fossil fuel producers accountable is a “copout.” 

The real culprit, according to Borenstein, is all of us who buy these fuels, because they are cheap and available. He argues that holding producers accountable is a distraction from what we really need to do, which is to better account for the damage these fuels cause to the environment, preferably by enacting a carbon tax.

We don’t think it’s a distraction at all. Many of us, including UCS, agree that we need a price on carbon as a key policy to help reduce global warming emissions. We also support individuals who want to reduce their own carbon footprint, as well as policies that reduce emissions from the automobile and utility industries. All these actions, working in concert, can reduce the future risks of climate change. And our Half the Oil campaign, in particular, is focused on policies that could dramatically reduce oil use and help us invest in more productive areas of the economy.

But to a very significant extent, it is the fossil fuel producers themselves that are standing in the way of progress on both enacting comprehensive policies to address climate change and policies that would help consumers reduce fossil fuel consumption. Nevertheless, Borenstein argues, “Those fossil fuel companies aren’t responsible, they just sell the stuff.” Yet in Borenstein’s home state of California, these companies are actively standing in the way of state laws that would reduce carbon emissions and set a price on carbon.

This past year, Chevron, a company that the new research identified as the biggest single private-sector contributor to emissions, along with allies in the Western States Petroleum Association, spent significant time and resources trying to push back on California’s low-carbon fuel standard (LCFS) and are continuing to resist efforts to include transportation fuels under the AB 32 cap on statewide heat-trapping emissions, as is now scheduled for 2015.

And what are fossil fuel companies doing to help consumers find solutions?  Not much, despite glossy advertising campaigns touting their “clean” energy solutions. Rolling Stone published an article this past summer detailing a trend toward dis-investment in clean alternatives among oil companies, and  Bloomberg News published a story in April that detailed how Chevron significantly scaled back its investments in low-carbon alternative fuels because, while they would be profitable, they would not be as profitable as oil production. Historically, we know that many of these companies also funded misinformation campaigns to deny the reality of human-induced climate change, even as scientists continued to publish authoritative reports outlining the realities of climate change.

Holding these companies accountable isn’t a “copout.” It’s a sensible, additional way, among many, to address climate change.

And what about the public? Statewide polls show support for policies that reduce emissions from transportation like the LCFS, including a poll released in August that found 81 percent (77 percent likely voters) support requiring oil companies to reduce transportation fuel emissions.

So if consumers want lower carbon products and producers are unwilling to provide them, who is at fault?

The bill for climate change is starting to come due, and it is enormous. We agree with Dr. Borenstein that internalizing some of those costs into the price of fossil fuels is a good idea, as are policies that encourage the adoption of low-carbon technologies. There is no silver bullet that will solve this problem.

UCS certainly understands that this effort has got to be more than assigning blame, and we support solutions that will not only help us reduce fossil fuel consumption and related emissions but also create jobs, protect health, and establish American technology leadership, as we have outlined with our Half the Oil proposal.

Over the last century, we’ve spent an enormous amount to subsidize the fossil fuel economy, and consumers’ options will continue to be limited as long as fossil fuel companies continue to invest in disinformation campaigns and fight policies that would make them accountable for the damage their products cause.

Everyone is responsible for climate change, it’s true. But some of us – and our institutions – are more responsible than others. It’s entirely reasonable to highlight the critical role fossil fuel producers play; they are the first point of contact for coal and oil extraction at the root of climate change. What this new research shows is just how few institutions are doing the major extraction. Holding them accountable is one step among many that could actually prevent the worst consequences of a changing climate.

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  • Some Responses to the many comments this post has elicited (including the thoughtful blog post by Adrienne Alvord at UCS)
     Yes, I realize that fossil fuels aren’t really cheap when one accounts from their full external costs. That’s my point. Producers and consumers should have to face the full cost they are imposing on society. A carbon tax can do that. Symbolic divestiture or attempts at shaming won’t.
     Subsidies to fossil fuel producers are stupid policy, but they have almost no impact on the cost of oil products or electricity. Oil prices are set in the world market where U.S. subsidies have negligible impact. In a recent paper (http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.26.1.67, see page 77), I showed that the impacts of subsidies on electricity prices in the U.S. amount to about one-tenth of a cent per kWh, a tiny fraction of the cost differential between conventional and renewable energy. Subsidies to fossil fuel production should end because it’s a waste of money, but they aren’t the reason fossil fuels are cheap.
     No, I don’t believe polls in which people say we should require oil companies to reduce transportation emissions suggest the public is willing to take responsibility for the role they play in creating the emissions. The outcry I hear every time the price of gasoline rises – especially blaming it on US oil companies when the price is set in a world market – suggests that consumers want cheap energy more than they want to address climate change. That is very frustrating to me, but I think asking the public to blame big carbon is going in the wrong direction.
     No, I don’t think the UCS study is just holding fossil fuel producers “accountable.” If so, then why not also hold consumers accountable for demanding cheap energy, driving big cars, expecting to be able to fly across the country or world at the drop of hat, etc.? Why not call out consumers and politicians who throw fits when the price of gasoline rises?
     Yes, many big carbon companies are fighting attempts to address climate change. When a big carbon company (or anyone else) sets up roadblocks to policy progress – through junk science, political contributions, or other activities – call them out on that. I have been and will be 100% behind that. But focusing on their fossil fuel production without placing as much or more blame on the buyers is just giving consumers a pass. And, by the way, some of the proposed climate policies are open to serious debate among people who care deeply about addressing climate change. I’m one of those people and I think the Low Carbon Fuel Standard is misguided policy.
     No, I don’t think it is worth our time to vilify big oil for not being the leaders in inventing alternatives to oil. They have entirely the wrong incentives, at least until we put a serious price on GHG emissions. I think alternatives are much more likely to come from scientists and entrepreneurs who don’t already have billion dollar stakes in the status quo.
     No, I don’t think it is appropriate to state an adversary’s views in quotes when the person whose views you are characterizing never said the sentence in quotes. I’m looking at you Adrienne. 😉