American Petroleum Institute CEO Mike Sommers joins the Yahoo Finance Live panel to discuss API's focus on transitioning to a low-carbon future as economies disengage from fossil-fuel use.
AKIKO FUJITA: In our special coverage, "Planet Earth in Crisis" this week, we are taking a closer look at the issue of climate change-- the environmental challenges as well as the policies to address them. And today, we're taking a closer look at the impact that's likely to have on Wall Street.
Emissions from fossil fuels remains a dominant cause of global warming today, but the oil and gas industry is now calling for a carbon tax to rein in those most responsible for greenhouse gas emissions. Let's bring in Mike Sommers, CEO of the American Petroleum Institute. Mike, it's good to talk to you today.
You raised a lot of heads a few weeks ago when you announced that you would be in favor of carbon pricing. So walk me through this new framework s that API has announced. And really, how do you curb greenhouse gas emissions while trying to keep the industry in business?
MIKE SOMMERS: Well, thank you, Akiko. It's great to be with you, particularly as we lead up to Earth Day and the big Earth Day summit tomorrow, led by President Biden. API is a member organization. We have over 600 member companies, both in the United States and worldwide. And we know that climate change is real, and we're focused on addressing the key risks of climate change. As a consequence of that, we've been working for many years on developing policies to address the challenge of climate change.
That really culminated a couple of weeks ago when we released a comprehensive plan on how to deal with climate change. This plan addresses not just what the government should do, but what the industry is committed to do to reduce our own emissions. As you mentioned, we talk a lot about pricing carbon, but we also have a focus on innovation. And innovation in this case means investment in, particularly, carbon capture and storage technologies.
And we're excited that many of our member companies are stepping up to the plate now to make sure that they're investing in these technologies. But we know that there's more to do and more incentives that can be put in place by the federal government as they start talking about the infrastructure package that's being considered in the Congress.
AKIKO FUJITA: Let's talk about the carbon tax elements of this first, though, Mike. We've heard lawmakers call for $40 a ton, but there are those scientists who say it needs to be twice or three times higher to actually make a dent in the emissions that are out there today. What's the number, the rate that API is looking at?
MIKE SOMMERS: We don't endorse a specific price on carbon. What we're saying is that there's a right way to do this and there's a wrong way to do this. There are a lot of proposals out there now that would require government mandates. They're kind of a command and control approach to tackling the issue of climate change.
What we're saying is that we should harness the power of the free market. We should put a price on carbon that actually gives a price signal to American consumers, and the American financial community, and to API member companies that actually gives a financial incentive to reduce our carbon imprint. So that's really been the focus of our advocacy, and it will continue to be.
But I do think as we enter into this Climate Leaders Summit, the carbon action framework that has been put forward by the American Petroleum Institute should be the basis upon which those discussions should be had, because it's really focused on those three things-- what the government should do, what the industry will do no matter what the government does, and focusing on the key importance of innovation and technology, which this industry has been a leader on for over 100 years.
ZACK GUZMAN: Mike, how does that-- how does that change maybe trickle through in terms of protecting the jobs right now under siege-- we talk about green new technologies out there and the way that the industry was hit hard-- you think about even just in Oklahoma, the rig count dropping significantly. What does it mean for the jobs attached to this, since we've heard from a lot of critics that they pay way better than a lot of these green jobs? So what's the employment impact you foresee?
MIKE SOMMERS: Yeah, I mean, look, you hit the nail on the head, Zack. Jobs in the oil and gas industry actually pay twice as much as the average job in the United States. And many of those jobs are union jobs. And labor unions like NABTU, or LiUNA, or the plumbers and pipefitters actually prefer the jobs that are offered in the oil and gas industry to other jobs, because of the great benefits they pay, and, of course, the jobs paying so much more than other jobs.
And employment is important. Over 10 million American workers are employed by the oil and gas industry. And we're starting to see demand go up in this post-pandemic period. And it's going to continue to rise as Americans get back on the roads for vacations or get back on the road for work. So we're really focused on making sure that we can continue to supply the energy that the world needs through American energy leadership.
AKIKO FUJITA: Having said that, if you look at the infrastructure bill the president's proposed, the climate initiatives in there, it's very clear that the move is away from the oil and gas industry, not necessarily towards it. There's $16 billion that's been set aside in that proposal to help with the transition for those workers that you talked about. Is that enough?
MIKE SOMMERS: Well, what I'd say is that those millions of workers that work in the oil and gas industry, they don't want to transition. They know the benefits and the pay that they get from the American oil and gas industry. And they want to keep those jobs.
So we'll be advocating for those workers on Capitol Hill and within the administration as these debates heat up in the United States Congress. Our focus is on making sure that the United States remains the world energy leader, particularly on oil and gas. And I'll tell you why that's important-- because outside analysts project that 50% of the world's energy will still be from oil and gas in the year 2040.
So the real question is whether they're going to get that oil and gas from the United States as the world energy leader or get it from regimes that are hostile to the United States. Because we know the world is going to continue to demand oil and gas far into the future.
AKIKO FUJITA: Mike Sommers, good to talk to you today-- really interesting to get this perspective-- the American Petroleum Institute CEO.