Exxon boss signals support for carbon tax

In what will be intrepreted as a remarkable volte face, the boss of the world's largest oil company, Exxon Mobil, last week broke with the company's traditional hardline on environmental issues and signalled that the company could support a tax on carbon emissions.

Speaking at an event in Washington, Exxon's chief executive, Rex Tillerson, said that a universal carbon tax would prove a more effective means of cutting emissions than a cap-and-trade scheme, such as that pioneered in Europe and now being proposed by US president-elect Barack Obama.

"As a businessman it is hard to speak favourably about any new tax," he said. "But a carbon tax strikes me as a more direct, a more transparent and a more effective approach."

The tacit support for a carbon tax represents a significant softening of position for a company that in the past became infamous over its reluctance to acknowledge that greenhouse gases contributed to global warming, and only last year angered environmentalists by opposing a high-profile shareholder resolution calling on it to draw up a more effective climate change policy.

In his speech, Tillerson voiced concern that carbon cap-and-trade schemes would prove ineffective and tilt the market in favour of certain industries, while penalising those included within any trading scheme.

"My greatest concern is that policy-makers will attempt to mandate or ordain solutions that are doomed to fail," he said, adding that a carbon tax was a fairer means of ensuring that all components of the economy share the burden of shifting towards a lower carbon economy.

"A carbon tax is also the most efficient means of reflecting the cost of carbon in all economic decisions, he explained. "From investments made by companies to fuel their requirements to the product choices made by consumers."

Cap-and-trade schemes are increasingly popular in the US. A regional cap-and-trade scheme including 10 eastern sea board states was launched last year, while a coalition of western states has a similar scheme in the pipeline.

Meanwhile, Obama's transition team is working on plan for a nationwide cap-and-trade scheme designed to cut carbon emissions by 80 per cent by 2050.

However, critics maintain that the need to measure emissions from thousands of different firms and heavy industrial sites mean they are harder to implement and administer than a straight tax on carbon-intensive fuels.