On Carbon Markets
The WSJ surmises that Exxon sees a coming carbon reduction scheme, such as a cap or tax:
the company’s subtle softening is significant and reflects a gathering trend among much of U.S. industry, from utilities to auto makers. While many continue to oppose caps, these companies expect the country will impose mandatory global-warming-emission constraints at some point, so they are lining up to try to shape any mandate so they escape with minimum economic pain.
Exxon has stopped funding the kooky Competitive Enterprise Institute, a Libertarian nuthouse that “last year ran television ads saying that carbon dioxide, the main greenhouse gas, is helpful,” according to the Journal.
It will be interesting to see the form the cap or tax takes, and whether a trading system will be included. The trading system regime sounds good, but is not without problems. For instance, China’s trading scheme is a big success, but production of credits is so lucrative that
the carbon market is encouraging companies in the developing world to make more of [an] underlying refrigerant than they otherwise would — so they can produce more of the global-warming gas, destroy it, and sell the credits. Such a “perverse incentive,” as the United Nations calls it, would be problematic because the refrigerant itself both threatens the ozone layer and contributes to global warming.
More on China’s scheme here.