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Oil producing nations take a different view on carbon taxes

Environmental policies such as a carbon tax, cap and trade and regulations to increase the efficiency of car engines, worry politicians from Qatar to Saudi Arabia, where national wealth depends largely on oil revenues.

Recently, Saudi Arabia dusted off its arguments against climate change regulation. Though the effort was largely belittled by environmental groups and laughed off by policy makers in countries that matter more than the kingdom in determining whether December’s climate summit in Copenhagen will be a success, it reveals a fundamental view shared by some – but not all – oil producers.

Saudi Arabia peddled its position that oil producers should be compensated for the demand drop at climate talks in Bangkok in October. Mohammad Al Sabban, the Saudi delegate, said: “Many politicians in the western world think these climate change negotiations and the new agreement will provide them with a golden opportunity to reduce their dependence on imported oil.”

“That means you will transfer the burden to developing countries, especially to those highly dependent on the exploitation of oil.”

Environmental groups accused Saudi Arabia of delaying negotiations, pointing out that the revenue for the Organisation of Petroleum Exporting Countries (Opec) would still increase $23,000bn between 2008 and 2030 if countries enacted strong climate change legislation that cut oil use, according to the International Energy Agency, the consumers’ watchdog.

In addition richer Middle East countries have a relatively simple way to cut their carbon footprint: Reducing domestic oil consumption and pollution, by cutting their generous petrol subsidies.

Wael Hmaidan, executive director of IndyACT, a regional advocacy group, said in Bangkok: “Despite the variability in the region, the current Arab position is mainly focused around protecting the oil trade rather than saving the planet from the adverse impacts of climate change.”

Opec – which sees itself as a champion of developing countries – is very sensitive to such criticism. This perhaps explains why Saudi Arabia found less traction from its ideas than it hoped when they were discussed at the group’s September meeting in Vienna.

Nevertheless, Opec’s first comprehensive policy position, released shortly after the September Opec meeting, notes:

“We must ensure mitigation response measures and emission reduction commitments are fair and just, taking into account historical responsibility of [industrialised nations], the huge developmental needs of developing countries as well as the adverse impacts of climate change and of response measures, including the adverse impacts on fossil fuel exporting countries.”

More recently, Shokri Ghanem, former oil minister of Libya, said any tax levied on carbon should be shared by the consuming and producing countries.

“We don’t think that oil producing nations should be penalised and pay the price for improving the environment,” he said in October, adding, “if you want a carbon tax imposed, ask us producers.”

This may be a quickly dismissed notion, but it is not quite so far fetched a sentiment when one takes into account that the oil consuming countries looking to impose a carbon tax are the same governments that regularly warn Opec not to increase oil prices by voluntarily withholding production.

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