While the heft behind the US Carbon Action Partnership might suggest that American business is united behind a "cap-and-trade" program, the reality is that a split is opening up as the flaws in cap-and-trade become apparent. FPL Group, which owns Florida’s largest utility and is also the world’s leading wind power producer and operator of the planet’s two largest solar fields, announced on March 31 that it supports a carbon tax (which it refers to as a "fee"). FPL stated that "cap and trade" would result in a "giant food fight over these [carbon] allowances," invite fraud, such as that which has marred similar programs in Europe, and result in volatile carbon pricing. According to FPL CEO Lewis Hay III, "We think the big winners in a trading scheme will all be the investment bankers." FPL Suggests Carbon Fee to Control Gas Emissions, MiamiHerald.com, March 31, 2007.
Ten days earlier, in the debate in Australia over how to cut greenhouse gas emissions, ExxonMobil broke ranks with both industry and government by citing the carbon tax’s advantages over cap-and-trade. Quoting directly from an article in the Australian, Exxon Advocates Tax over Carbon Trading:
ExxonMobil warns that trading systems risk having a highly volatile carbon price that will make it difficult for business to make long-term investments to cut carbon emissions.
It notes that given that tackling climate change needs a global response, a tax is potentially simpler to apply internationally than making countries agree to an international trading system. It also says that some economists believe a tax would be more transparent and less bureaucratic.
While The Carbon Tax Center disagrees with much of ExxonMobil’s stance on climate change, we think the company is right about the advantages of a carbon tax over cap-and-trade.