Security on the national and international energy and environmental fronts can be achieved through policies that support innovation, competition and free trade, Exxon Mobile Chairman and CEO Rex Tillerson said during a speech this week at Woodrow Wilson International Center for Scholars in Washington, D.C.
Tillerson outlined the energy challenge facing America and the world, and pointed out that global energy demand is expected to be 35% higher in 2030 than it was in 2005, despite the current economic slowdown, efficiency improvements and growth in alternative energy sources.
Providing energy to meet the increasing demand while also protecting the environment will require development of all viable sources of energy and multiple technology breakthroughs, Tillerson said, pointing out that the increase in energy demand is being driven largely by economic expansion in developing countries.
“Meeting our many energy challenges requires a multidimensional approach,” he said. “We need to put in place policies that support an integrated set of solutions that help us find new energy supplies, increase energy efficiency and discover the innovations that can address climate risks in the most effective manner.
“By combining energy, efficiency and environmental goals,” Tillerson said, “integrated solutions help us develop and deploy new technologies at every point in the energy chain. In this way, we can meet our multiple energy challenges with multiple solutions.”
One example of a policy challenge provided by Tillerson: The current discussion about whether a cap-and-trade system or a carbon tax would be a more effective option for reducing carbon dioxide emissions.
A cap-and-trade system allows businesses to trade emissions allowances set by government, but has problems with verification and accountability and requires new market infrastructure — “a Wall Street of emissions brokers” — as well as a costly and substantial expansion of regulatory and administrative oversight, Tillerson said.
“A carbon tax strikes us as a more direct, transparent and effective approach,” he said, adding that it’s easier to apply globally, avoids the establishment of new markets for trading emissions and new regulators to monitor them, can be implemented through the existing tax infrastructure and made revenue-neutral to mitigate the impact on the economy.
“It is the most efficient means of reflecting the cost of carbon in all economic decisions — from investments made by companies to fuel and product choices made by consumers,” Tillerson said.
Tillerson said Americans are increasingly understanding that there is no single answer to energy, efficiency and environmental needs, as illustrated by public support and Congressional action in favor of lifting the moratorium on development of the country’s vast offshore oil and natural gas resources.
“Opening up U.S. supplies of oil and natural gas would boost our economy by simultaneously lowering the cost of energy, increasing employment and providing a new source of government revenue,” he said, referencing a recent study’s conclusion that developing areas of the U.S. that have been kept off limits would generate more than $1.7 trillion in new government revenue and create 160,000 jobs.