Exxon CEO Advocates Emissions Tax

By RUSSELL GOLD and IAN TALLEY

The chief executive of Exxon Mobil Corp. for the first time called on Congress to enact a tax on greenhouse-gas emissions in order to fight global warming.
In a speech in Washington, Rex Tillerson said that a tax was a "more direct, a more transparent and a more effective approach" to curtailing greenhouse gases than other plans popular in Congress and with the incoming Obama administration.
"My greatest concern is that policy makers will attempt to mandate or ordain solutions that are doomed to fail," Mr. Tillerson said.
The policy he is advocating is often called a carbon tax because it would be imposed on emissions of carbon dioxide, the most common man-made greenhouse gas. By backing it, Mr. Tillerson has become an unlikely member of a club that includes former Vice President Al Gore, consumer advocate Ralph Nader and President-elect Barack Obama's designated head of the National Economic Council, Larry Summers.
Carbon taxes have been politically unpopular. "Calling for a carbon tax could be a ploy because few observers believe such a tax is politically feasible in our Congress," says Daniel J. Weiss, a fellow at the Center for American Progress, a left-of-center think tank in Washington.
The leadership of the Democratic-led Congress and other major oil companies prefer using a cap-and-trade approach. Under this system, the government would establish economy-wide emission limits as well as limits for individual companies. There would be a market for firms to buy and sell pollution allowances based on whether they were above or below their caps.
ConocoPhillips and the U.S. divisions of BP PLC and Royal Dutch Shell PLC have all supported a cap-and-trade solution.
Mr. Tillerson said a cap-and-trade system would be costly, bureaucratic and create a "Wall Street of emissions brokers."
The speech signals an evolution in the thinking of Mr. Tillerson, who became chief executive and chairman of Texas-based Exxon, the world's largest Western oil company, in 2006. Mr. Tillerson now calls the issue complex and challenging to understand, but -- in contrast to Exxon's previous party line -- he doesn't question whether fossil fuel use has contributed to rising global temperatures.
In 2007, when he gave his last big speech on climate change, he said he didn't support any particular policy for curbing carbon-dioxide emissions.
Observers say Mr. Tillerson's endorsement of a carbon tax could have widespread ramifications. "When the biggest company in the world says this is OK, that is giving permission for a whole lot of people who have resisted carbon policy on the grounds it is bad for business to soften their resistance," says Michael Webber, associate director of the University of Texas Center for International Energy and Environmental Policy.
Write to Russell Gold at russell.gold@wsj.com and Ian Talley at ian.talley@dowjones.com