Why Oil Companies Support Carbon Caps

Amongst all of the recent news about climate change, I started hearing about large corporations, even oil and car companies, who were backing legislation such as carbon caps. The most notable of these groups is the US Climate Action Partnership which includes companies like BP America and PG&E that are throughly tied to fossil fuels. Why are these companies supportive of legislation that will create wholesale changes in the manner in which their industries operate?

First and foremost, these companies aren’t stupid and realize that, given the current political climate where human-induced global warming has become accepted as truth, their best move is to mitigate the effects of legislation that changes the way their businesses operate. The best way to run any business is to simply keep on trucking; if you can sell the same product or service without having to change what you deliver or the manner in which you create it, your operating costs will be very low. A cap-and-trade system would certainly change the way any carbon-producing industry must operate, but it probably wouldn’t require as much change in facilities and production methods as more specifically defined legislation. Cap-and-trade simply states, “Either release less carbon or buy the right to pollute more from someone else.” This gives companies a lot of options.

The more sinister reason that carbon producers support cap-and-trade legislation is that they know the world is changing. Alternative fuels are gaining momentum as gas prices soar and hatred of pollution and high prices adds to the animosity towards carbon-based fuels. Tempering this hatred with pseudo-green initiatives like supporting carbon-control legislation may help fossil-fuel dependent companies stand up to other energy sources. This also has the side effect of possibly convincing some rainy-day environmentalists that oil companies aren’t so bad after all.