BP wants fossil fuels to cost more so renewables appear less expensive

bpWhen it comes to getting the most bang for your buck, you can’t beat fossil fuels. And that’s a big problem for costly renewables. According to the Wall Street Journal, BP’s Technology Chief David Eyton said in a report Monday that unless the world makes carbon-based fuels more expensive, renewable energies will never be competitive.

He believes a “carbon price of $40 a ton would make [natural] gas a more economical power source then coal,” but still thinks a higher carbon price is needed to make renewables like wind and solar less expensive and more competitive. In other words, renewables can’t compete on a global stage without their costs being artificially deflated.

Even Exxon’s CEO, Rex Tillerson, has publicly said that investing in renewable energy is akin to losing ‘money on purpose.’ And as early as Oct 30, Chevron cut “7,000 jobs, or 11 percent of its workforce, the latest indication of the toll that low oil prices are taking on the industry.” With the explosion of fracking, the Iran deal all but a done deal, consumers are benefiting from the relatively cheap supply of oil.

Maybe that’s why Eyton is recommending a carbon “tax” so high that traditional fossil fuels no longer outperform renewables on cost and efficiency. In fact, the oil giant’s “long-term forecasts project that coal will remain the dominant fuel in power generation by 2035, but will lose market share to natural gas and renewables. In transport, liquid fuels are expected to continue to dominate in coming decades.”

BP is not alone. A number of giant oil companies (that also drill for and then sell natural gas) are pushing for carbon taxes, even though there effectiveness has not been shown in lowering so-called global warming emissions like carbon dioxide (CO2). By putting a carbon tax on coal and oil, costs for natural gas would become more competitive. Either way, the oil companies are going to come out on top as they have stakes in both oil and gas.

BP’s Chief Executive Bob Dudley also told a conference in Paris last June that a one percent switch from coal-fired to gas-fired power plants “would cut emissions as much as increasing renewable energy by 11 percent.” As the Wall Street Journal also noted, these “large oil companies are producing an increasing volume of natural gas, and BP expects it to comprise 60 percent” of its portfolio by 2020. What Dudley is remiss in telling his audience is that natural gas is still considered a fossil fuel that emits CO2, albeit at lesser amounts.

Meanwhile, as coal is being increasingly scuttled to the sidelines by Obama’s aggressive Clean Power Plan, which appears intent on bankrupting the coal industry, electricity prices continue to rise for all Americans. Even as Obama continues to use the EPA to shutter more coal-fired power plants (which produce cheap, plentiful energy), the coal industry is defending its role by “highlighting that advanced technologies can sharply reduce carbon emissions and that coal remains a critical fuel.”

While nations gather in Paris for the upcoming Paris Climate Talks, where a treaty is expected to emerge that would channel billions of dollars to the poorest of nations via an inaptly named climate risk fund, China and India have already indicated they would not be jeopardizing their respective industrial revolutions.

China is projected to build a new coal-fired power plant every 10 days for 10 years, while India opens a new coal mine every month. Currently, China burns more than “4 billion tons of coal each year,” while the “U.S. burns less than 1 billion”, and the “EU burns 600 million.”

Yet BP still believes a carbon tax of between $40 and $80 a ton is required to make other energy sources competitive, even though there are no mechanisms in place to force the largest coal burners (China, India) on the planet to fork over a dime. It’s a feckless gesture by BP that sounds great on paper (which is where the idea germinated), but in actuality it’s a Gordian diversion ahead of the climate talks. While Europe might jump on the idea of a high carbon tax, President Obama still has to go through the Congress, something he is loathe to do.

And as prices for motorized fuel in the United States hit an all-time-low (as compared to inflation), Democrats are already talking about doubling the federal gas tax. Currently, the federal excise tax on gasoline totals 18.40 cents per gallon. That money is supposed to help fix and maintain our national highway and bridge systems, which is currently a patchwork of pave-and-pray solutions. This is before the state you live in gets its take (which averages out to 30.28 cents/gallon), which is supposed to go toward fixing local roadways and other infrastructure.

Championing a carbon tax to avoid garnering too much attention at the upcoming climate talks seems like a desperate ploy to get consumers off of one type of fuel and hooked on another. While oil companies like BP say they want to keep temperatures from rising more than 2 degrees Celsius (a meaningless number that has no basis in fact), the truth is much simpler: We can’t gouge you at the pump, but we’ll eventually get your money when you pay your electric or gas bill.


Comments (6)

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    Why wouldn’t BP and others promote higher taxes ?
    Some government can wear that rip off and they look like they are being green .
    When politicians , oil companies and green Marxists are on the same page tax payers are about to get screwed big time .
    Exxon ‘s CEO at least had the balls to tell the truth .

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    I would like BP to explain how making coal more expensive, that makes wind and solar cheaper … really? … WTF? … who are these idiots?

    • Avatar

      Paul Homewood


      Only relatively cheaper!

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    A carbon tax is like shooting “OWN NET GOALS “.

    As Democrat President Obama has said ,energy prices will rise significantly as part of his plan .

    Natural gas prices are about half what they were
    less than 10 years ago . Thus renewables that were not even close to being competitive 10 years ago are now in la-la land .
    The $40per carbon tax promoted is a complete joke and will do almost nothing to close the massive cost premium gap of intermittent renewables .

    The $40 per tonne carbon tax is pure and simply
    a $trillion dollar tax grab and the fossil companies could care less if the government want to charge it .

    The fossil fuel companies have already done the elasticity of demand calculations and know a carbon tax of at least 200% higher ($120 per tone ) would be necessary to even start to have any effect . In other words they are going to continue to sell as much as they did before so why not play ball . When the jobs get outsourced from the west the fossil fuel will just be shipped to those “developing ” countries .
    It may never get to that however because the governments main objective is to tap a new source of revenue and killing the economy is a one way ticket out of office .

    Any stories you hear about the “great success of a carbon tax are full of crap . i.e. British Columbia .

    If price signals really were that influential on demand then over the past 10 years when the market price of natural gas has dropped in half (even when including a carbon tax ) demand should have gone through the roof but it has not . In fact it has dropped because manufacturing is being outsourced and driven offshore .Installation of more energy efficient boilers are also reaching their maximum as older equipment has been gradually replaced over the past 30 years ,long before the phoney global warming scam and carbon taxes were promoted .
    In British Columbia , the current government stopped the increases in the carbon tax because almost no one else was stupid enough to put an artificial job killer into their economy,and despite an unwillingness to acknowledge the failed logic promoted by local academics .
    A CarbonTax is nothing but indiscernible noise in volatile energy price markets unless they are tremendously high . That is why governments like them . Government can hide behind the skirts of fossil fuel companies and fossil fuel companies buy favour from government who are then beholding thus ensuring more and more fossil fuel gets used .
    A perfect alignment of self interest … for a while .

    When your economy is provide government sponsored suicide (carbon tax) someone else is thrilled to watch the stupidity as they pretend to cut emissions 30 years down the road .

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      A carbon tax is a tax on everything and therefor purely inflationary.
      To tax energy use sets everyone back because the currency automatically purchases less per unit.
      Even workers who are unionized under powerful unions must fight relentlessly for years just to get back to where they were.
      Why not tell it like it is. Why not identify a carbon tax for what it really is.

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