We don’t need to choose between meeting our energy needs and limiting global warming. By implementing a Carbon Takeback Obligation, we can do both.
To meet its commitments to greenhouse gas reductions, governments must use regulation to harness the capabilities of major oil and gas companies. Specifically, governments should require that all fossil fuels extracted or imported into its territory be offset by sequestering an amount of CO2 equivalent to the carbon content of the fuel. This Carbon Takeback Obligation (CTBO) would be phased in starting immediately, reaching the requirement of storing 100% of emissions associated with oil, gas and any remaining coal production by 2050.
Failure to meet this requirement would result initially in financial penalties and ultimately in loss of the right to produce or import oil and gas.
This regulation would unleash the innovative capacity of the oil and gas industry, encouraging oil giants to focus their enormous capabilities and resources on developing and deploying the technologies needed to comply. Many innovative approaches will emerge, and they will become more affordable over time.
This approach is not exclusively about Carbon Capture and Storage (CCS), but rather encourages any technology which achieves long term, durable carbon storage. When the fossil fuel industry focuses its vast resources on developing the infrastructure needed to achieve this storage on a large scale, many additional, more cost-efficient approaches will emerge.
It’s important to encourage phasing out fossil fuels. But we can’t allow fossil fuel production to continue unabated in the meantime.
Frequently Asked Questions
Does a CTBO favor the goals of the industry or environmental organizations?
This solution has the potential to meet the objectives of both groups. On the industry side, a CTBO removes the concerns of competitive disadvantage of spending on reducing emissions. Instead, producers will unlock their innovative potential to race to be the lowest-cost producer of net-zero energy. Environmentalists, meanwhile, can recognize that this is a transition-friendly approach that will take carbon out of the atmosphere while putting the costs on producers, rather than on taxpayers as some other approaches do.
Isn’t what you’re proposing just Carbon Capture and Storage (CCS)?
CCS (or CCUS) is one way to meet a CTBO, but it is not limited to that. For instance, carbon could be permanently integrated into products like plastics or cement. Many new, innovative approaches will emerge as companies apply their enormous resources to finding the best and most cost-effective ways to safely take carbon out of the atmosphere.
How does a CTBO differ from other policy proposals?
Unlike a carbon tax, which simply makes polluting more expensive, a CTBO will ensure that we limit global warming and achieve net zero emissions by 2050. And unlike a tax credit for capturing and storing carbon, a CTBO would not take the cost of that carbon sequestration out of taxpayers’ pockets. In our supply-side policy, the companies that profit from oil and gas, and are therefore responsible for the consequences, pay these costs.
Is there any historical precedent for such regulation?
Yes: 50 years ago, pollution from cars was a major health issue in U.S. cities, and citizens demanded action. In response, Congress passed the Clean Air Act, and the Environmental Protection Agency (EPA) was formed. The EPA established standards and requirements that spurred rapid innovation among auto and oil companies, which invested billions to develop solutions to reduce vehicle emissions. As recently as last November, the EPA proposed a rule to reduce emissions of the potent greenhouse gas methane. Regulations can be used to address carbon dioxide emissions, too.
Are there similar regulations currently in place?
Regulation following the concept of “extended producer responsibility” (EPR) already exists. For example, most European Union states have EPR requirements in place for packaging. EUROPEN, an association of major packaging companies in Europe (such as Coca Cola and Tetra Pak), strongly supports EPR as a key component of waste management. The concept needs to be applied to society’s largest waste product, carbon dioxide.
How will your proposal affect oil and gas producers already working to reduce emissions?
Our proposal would level the playing field because all companies will be compelled to meet regulatory requirements to reduce atmospheric carbon, not just the companies that are voluntarily working to reduce emissions. The most innovative and cost-efficient companies will fare the best.