Shell bashes bans on gasoline cars, proposes carbon pricing instead

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Shell fuel station in Europe

Shell fuel station in Europe

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The prospect of bans on gasoline and diesel new-car sales have become a much greater threat not only to automakers but to oil companies as well, now that China has said it is studying such a move.

The world's largest car market has not announced any timetables for such a ban, which will likely be implemented to give domestic automakers the maximum advantage.

But the head of strategy for one oil company has already slammed such bans, arguing that it runs the risk of ending efforts to roll out combustion engines with lower emissions.

DON'T MISS: China wants all electric cars: will it work? Reasons and reactions

The Anglo-Dutch oil company Shell supports the goals of reducing carbon emissions and air pollution, said its strategy head Guy Outen, but didn't believe governments should be in the business of "picking solutions."

Quoted earlier in September in an article by the British Financial Times (subscription required), Outen suggested taxing carbon emissions instead.

That would allow automakers to choose from among a range of options to reduce carbon in the short and medium term, he argued.

Shell Concept Car

Shell Concept Car

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Shell Concept Car

Shell Concept Car

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Shell Concept Car

Shell Concept Car

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“Put a price on carbon," Outen told the FT, "stand back and watch the rush of technology to find the cheapest solution."

And, he said, continued reductions in carbon emissions from rising numbers of gasoline and diesel vehicles in developing countries would reduce oil demand three times as much as the likely impact of electric cars.

In essence, Outen argued, more carbon could be cut sooner by tougher emission limits on cars with engines than by mandating conversion to zero-emission vehicles in years from 2025 to 2040.

CHECK OUT: GM CEO Barra attacks China gas-car ban, suggests buyers should decide

Cutting the emissions of a growing global vehicle fleet requires continuing to reduce the carbon emissions per mile from each one.

Shell's internal projections suggested that even with "aggressive" consumer demand for electric cars—defined as one in three vehicles sold in 2035—demand for oil used to fuel road vehicles will continue rising until 2035.

Stemming the growth in oil consumption before then would require "forced reductions" from legislative policies.

Chevrolet Bolt EV being charged outside Go Forth electric-car showroom, Portland [photo: Forth]

Chevrolet Bolt EV being charged outside Go Forth electric-car showroom, Portland [photo: Forth]

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Other projections, however, suggest global demand for gasoline and diesel fuel may peak more than 10 years sooner, as the price of electric cars falls to parity with conventional vehicles sometime during the 2020s.

Outen did not explain why the proposed bans on sales of cars with engines were the alternative to stricter vehicle carbon-emission rules, instead of an added measure on top of such rules.

Still, a carbon tax is in many ways the fairest and simplest way to penalize emissions of carbon dioxide that contribute to climate change, which are now a cost-free "externality" to the emitters.

Numerous think tanks have proposed carbon pricing over the years, and some electric-utility executives would welcome it as a way to solidify the long-term regulatory environment in which they must make huge capital investments with 50-year amortization cycles.

As an August article in New York Intelligencer posited, somewhat cynically, that even in the U.S. a carbon tax could accomplish numerous policy goals and be palatable in the current political environment

It would impose much of the tax burden not on large corporations but on the customers to whom they would pass it along, including low- and middle-income buyers of gasoline for the cars that take them to work.

Beijing smog

Beijing smog

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This regressiveness, suggests author Jonathan Chait, would satisfy the tax-cuts-for-the-rich-at-all-costs segment of the political spectrum.

It could be presented as a tax on corporations—popular with the electorate—even though it was nothing of the sort.

The challenge is that states that produce coal and oil would still find their product disadvantaged.

We note that Shell's idea of a carbon tax already exists in European countries where annual vehicle registration fees are based on their carbon emissions.

But we're not going to hold our breath waiting for such systems to arrive in the U.S.

[EDITOR'S NOTE: Green Car Reports thanks our tipster, who prefers to remain an International Man of Mystery.]

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