It’s official: the oil spill that began in the Gulf of Mexico on April 20^th is now the largest in American history, surpassing the Exxon Valdez spill in 1989.  Sen. Lisa Murkowski (R-Alaska) observed that "the recovery from the Exxon Valdez oil spill was long and sad, and it took 20 years for litigation over punitive damages to be resolved....That in and of itself was a tragedy we can't let happen again."

When news of the Exxon Valdez oil spill broke in March of 1989, the slow and inadequate corporate and government response to the disaster ushered in a new wave of leaders in the environmental movement.  One of these new visionary leaders was the late Joan Bavaria, the driving force behind the Boston-based CERES, which was founded in 1989 to advance what was then viewed as a sweeping 10-point code of environmental conduct that became known as the CERES Principles.

In ancient Rome Ceres is the goddess of agriculture, charged with guarding humankind's survival.  In the wake of the Exxon Valdez disaster, Joan Bavaria and the CERES team began to build a movement to do just that by creating a new way to hold companies to higher environmental performance and disclosure standards and to provide market based incentives to spur innovation and environmental leadership.  Joan worked tirelessly to build a first-of-its-kind multi-stakeholder coalition comprising environmental organizations, corporations, faith-based institutions and institutional investors all working to find new collaborative solutions.

It was not an easy task in the early 1990's to bring corporate CEOs and leaders in the environmental movement together.  At the time of the Exxon Valdez spill, a spokesman for Exxon said that the CERES Principles "do not recognize the need to balance environmental protection with the importance of adequate energy resources and a stable, healthy economy."

Five years later another oil company, Sun Oil, had an entirely different view on this when it broke ranks with the Fortune 500 and surprised everyone to become the first large company to join with CERES.  The CEO of Sunoco, Robert Campbell, said at the time that his company and members of CERES developed trust for each other and realized that their goals were similar. "Their goal and our goal did not seem so far apart," Campbell said. "The Sun Company decided that by signing the CERES principles they would be placing themselves at the forefront of business' role in protecting the environment."   Bob Campbell displayed true leadership and willingness to ignore pressure from his CEO counterparts, who at the time were angry at him for joining with environmentalists.

CERES continues to play an important role and is focusing on steering investor assets toward companies demonstrating a commitment to sustainability and improved environmental performance and away from more risky laggards.  The original reporting framework CERES designed in the early 1990's evolved into the Global Reporting Initiative, the de facto standard for corporate disclosure of sustainability information used by 1,500 companies worldwide.

New initiatives are emerging today to tackle the new paradigm and the hard choices associated with our addiction to oil.  Earthster, for example, allows companies to quickly assess the environmental impacts of thousands of household products.  And consumers now have a new resource in Good Guide that rates over 75,000 products on environmental performance.    These innovations and others all mark the beginning of a new era of radical transparency where the power is shifting from producer to consumer, as new information and resources become available to separate companies that are truly green from those that greenwash.

The Future for BP

BP's CEO Tony Hayward has pledged  "to clean up every drop of oil" off the oil-soaked shore and to put the "Gulf coast right as fast as we can."   Since April 20th, BP has spent over $800 million responding to the spill.  BP's stock price has dropped over 25% during this period, eroding nearly $25 billion in market value.

More trouble lies ahead for BP as it may face the specter of EPA fines of $1,100 per gallon or up to $4,300 if gross negligence was found to cause the spill.  The total costs for BP could exceed by some estimates over $25 billion, far eclipsing the $3.8 billion costs for the Exxon Valdez spill.

How BP handles these costs will be a true measure of the company.  BP has come under fire for its early handling of the financial settlements from individuals.  Alabama's Attorney General Troy King  has said he told BP to stop encouraging settlement agreements among coastal residents that he said stripped people of their right to sue in exchange for a $5,000 settlement.  Furthermore, CEO Hayward recently was quoted in The Times of London repeating his commitment to pay all verifiable individual claims but qualified his statement further by saying that because "this is America" many of the claims will likely be "illegitimate." Instead of hedging and dodging, BP would be well served to take the high road on settlement issues and learn from the lessons of Exxon

On the wall of Bavaria's cluttered Boston office was a sign that read:   “Life is a test. It is only a test. If this were your real life, you would have been given better instructions.” She was put to the test in 1990 as she visited Prince William Sound on the first anniversary of the Valdez spill and wrote: ''The extent of the damage is still disputed and probably will be forever.  But one thing was crystal clear: such disasters need not happen, they must not happen, and we must not let time heal this wound so well that we forget the tears, the tragedy, and bet again on luck to pull us through.''  This message rings as true today as it did in 1989. While the tragedy of the Gulf oil spill itself cannot be undone, let’s hope that Mr. Hayward is prepared to follow through on his original commitments and follow Joan's advice of 21 years ago as he deals with the aftermath of clean-up and compensation.

Mark Tulay worked for Joan Bavaria at Boston-based CERES as the organization's first full-time employee beginning in the 1990's.  He has worked in the environmental movement for over 15 years and is the Founder and CEO of Sustainability Risk Advisors, a consulting firm that advises non-profit organizations and institutional investors on sustainability related issues.

by Peter Asmus

The radically altered political dynamics in Washington, D.C. due to the loss of a Democratic Senate seat in Massachusetts mean that so-called “cap-and-trade” climate legislation probably has little chance of passing this year.  The only hope for passing a bill in 2010 that would cut carbon emissions could involve what most pundits have long thought of as the least politically viable approach: a tax on carbon.

But if that’s going to happen, an alliance of strange bedfellows will have to coalesce in short order, bringing together extremes on the left and right.  Joining in a legislative push would be environmental advocates and some large oil companies – most notably ExxonMobil, long a chief climate change skeptic, but more recently a carbon tax advocate following shifts in upper management.

“Climate change is an issue we take seriously and (we) believe responsible steps should be taken to address the risk,” says Ken Cohen, the oil company’s vice president of public affairs.  “We believe a revenue-neutral carbon tax is a more efficient policy option to reduce emissions…and is more able to be applied on a global basis than a cap-and-trade system.”

ExxonMobil’s opposition to a cap-and-trade policy is based, Cohen says, on a belief that “we should not be creating a complex derivatives market for a new commodity called an ’emission allowance’ as the recent financial crisis demonstrates. There is no need to create an opportunity for traders to extract profits from a trading system.”

Getting 60 Votes

Cohen’s critique of proposed cap-and-trade legislation – long the favorite of Washington insiders – sounds almost identical to that of the system’s environmental critics, like Friends of the Earth, Greenpeace and the Sierra Club.

Under a cap-and-trade framework, a cap would be set on carbon emissions.  Then, large carbon emitters would be able to trade for “clean air” credits created by companies which either perform activities that allegedly reduce net carbon (like planting trees or controlling emissions) or deploy new energy technologies that displace carbon, like replacing coal with wind.

A carbon tax involves a tax on all fossil fuels, such as coal, oil and gas.

“In my view, there is zero chance that any [cap-and-trade] climate legislation will pass this year,” predicts David Bookbinder, chief climate counsel for the Sierra Club. “The only thing that really makes sense is a carbon tax – but that’s the big ‘T’ word. A carbon tax has no price volatility, there is no abusive manipulation or a market; it is a very rational policy approach.”

In January, 80 U.S. corporate leaders -- including CEOs from companies such as eBay, Virgin America and Pacific Gas & Electric -- signed a joint letter urging President Obama and Congress to pass comprehensive climate and energy legislation this year. The prime message in the letter is that unless the U.S. sets clear carbon reduction targets, it will fall behind in the current global race to develop new carbon-free renewable technologies.

But most of those companies hold little sway among conservatives in Congress.  ExxonMobil and other energy companies not invested in coal do carry weight.  If they place a high priority on passing climate legislation in the form of a carbon tax, they could bring with them the prized 60^th Senate vote environmentalists need to avoid a filibuster against climate legislation.

Changing of the Guard

Under its prior CEO, Lee Raymond, ExxonMobil earned a reputation as an eco-renegade.  A smart and hard-nosed chemical engineer, Raymond was tone deaf to the social and environmental investors and advocates who framed the sustainability movement a decade ago.  He proudly positioned the company as the world’s most powerful climate change denier.

Now, three years after the transition to current CEO Rex Tillerson, the company is gently edging out of its self-imposed period of sustainability exile.  Tillerson can’t be regarded as an unbridled green advocate, in the model of BP’s former chairman Sir John Browne, but an increasing number of one-time critics think that, when it comes to actual performance on the human rights and the environment, Tillerson and his company could be the real deal.

“ExxonMobil seems to have recently had a dose of reality pills, and is taking climate change seriously,” says Bennett Freeman, Senior Vice President, Sustainability Research and Policy, for Calvert Investments, a leading socially responsible investment company. “For example, they recently invested $600 to $700 million on developing biofuels from algae.”

Freeman suggests that ExxonMobil’s support of a carbon tax is not driven by any desire to woo environmental advocates. “ExxonMobil does not do the warm and fuzzy thing well,” he says.  On the other hand, the company could be a powerful force in the carbon tax debate.  Culturally, says Freeman, “they are very straightforward. If they tell you ‘no,’ they mean ‘no.’  They have a “command and control” culture that helps drive commitments through the company.”

Seasoned eco-warriors like Randy Hayes, founder of the Rainforest Action Network and former head of the International Forum on Globalization, are happy to see oil companies such as ExxonMobil supporting a carbon tax.

“Either cap-and-trade or a carbon tax can be made to work to reduce the damage our society does, but the carbon tax is cleaner and my choice,” says Hayes. He goes on to say that “I can't imagine the version [of the carbon tax] that ExxonMobil, the Wall Street Journal, or the Financial Times want is the same one that nature needs. That said, we need the captains of industry to back a plan commensurate with the scale and timing of the problem.”

The Business Virtues of a Tax

There are compelling business reasons for companies like ExxonMobil to support a tax on carbon.

First, if Congress fails to act on climate, the U.S. Environmental Protection Agency will be forced to regulate carbon emissions under the Clean Air Act, creating a library of complex rules that could be expensive and only marginally effective.

Second, if Congress enacts a cap-and-trade approach, ExxonMobil fears the price volatility that could come with a global carbon trading regime, which could wreak havoc on oil development planning and finance.

Third, a carbon tax will reduce demand for coal, the most polluting fossil fuel, and give a marketplace advantage to natural gas and biofuels, the most carbon-lean.  ExxonMobil has increased its investments in natural gas, and recently made major investments in advanced algae biomass energy conversion.

Fourth, ExxonMobil may want to counter competitors like Shell, who are highly invested in energy commodity trading.

Environmental groups have their own reasons for supporting a carbon tax. “The whole concept behind the House and Senate cap-and-trade bills – creating large, international markets for carbon – is flawed. Worse, it gives away incentives to polluters and the targets for reductions are woefully inadequate,” concludes Ben Schreiber, Climate & Energy Tax Analyst for Friends of the Earth.

Friends of the Earth is one of more than 400 organizations now collaborating under the broad umbrella of “Climate Reality Check,” an initiative contemplating alternative legislative approaches to those already being considered by Congress.  “We don't have the 60 votes in the Senate to get where we need to be: a 40% reduction in carbon from 1990 levels,” says Schreiber.  “Even if the offsets included in either House or Senate cap-and-trade bills were real and verifiable, the reductions in carbon from 1990 levels are still less than 10 percent.”

Members of the “Climate Reality Check” coalition – which includes environmental justice, low-income and faith-based organizations - signed a letter last year opposing the House cap-and-trade legislation sponsored by Reps. Henry Waxman and Edward Markey.  The group had been exploring a "Plan B" even before the Copenhagen summit, but has yet to publicly come endorse a carbon tax or any other approach.

Elaine Kamarck, of the Kennedy School at Harvard University, and co-chair of the U.S. Climate Task Force, thinks the political viability of a carbon tax has actually increased over time.

“If a consensus emerges that cap-and-trade is just not going anywhere – and that seems to be just sinking in – then they will go back to the drawing board and examine other options,” she said. “You have to realize that cap-and-trade was initially being pushed before the economy fell apart. Markets were God and Wall Street was still filled with heroes. In that kind of political environment, cap-and-trade had some ‘oomph’ behind it. Now, Goldman Sachs and the rest of Wall Street are in the same category of bad guys as big polluters.”

Is ExxonMobil Serious?

Of course, any alliance with environmentalists depends on whether ExxonMobil is truly committed to a carbon tax.   Some critics claim the company’s public about face on climate change under CEO Tillerson is not heart-felt.

Robert A.G. Monks, a long-time ExxonMobil shareholder and critic, gives Tillerson credit for acknowledging “that there is such a thing as global warming” but harshly criticizes the ”inability of top management of this colossal company to understand, to take into account, to respond responsibly to the expressed concerns of entitled constituents.”

And there are lingering doubts regarding ExxonMobil’s role in the climate change debate. A recent story in the U.K.’s The Independent claims ExxonMobil was the funding source behind the rash of stories feeding skepticism about climate change in the lead up to the Copenhagen summit last December. While there is no doubt that ExxonMobil has delivered large financial contributions to think tanks such as the Atlas Economic Research Foundation (in the U.S.) and the International Policy Network (in the U.K.) as late as 2008, there is a lack of current available evidence the firm is the largest funder of such activities in 2009.

Whether ExxonMobil is playing two sides of the climate change issue at once is intriguing, to say the least. It could very well be that the company is a bit schizophrenic, which would not be surprising, given the history and size of the firm.

If a carbon tax is to ride to the rescue for both radical environmentalists, the faith community, human rights activists and, yes, oil companies, then something had better happen soon, since the attention span of Congress is limited, and another election cycle is nearing.

Peter Asmus (www.peterasmus.com) is the author of four books on energy and has been covering energy policy for over 20 years.