Exxon announced that it will spend $1M over next 2 years in order to promote/lobby for a carbon tax. These carbon taxes create incentive to reduce the consumption of fossil fuels. Nobel prize winner economist, William Nordhaus, has argued this tax is essential to any well-thought-out policy to combat global warming.

1) Why is some sort of government intervention (tax/regulation) necessary in order to reduce global warming? Why won't individuals and firms take sufficient measures on their own to reduce production of greenhouse gases?

Please explain in detail from an economic standpoint.

2) What kind of impact would a carbon tax end up having on gasoline prices and output? Please Explain in detail from an economic standpoint.

3) Would the $1 million expenditure meet Friedman's or Porter's criteria for a wise corporate investment? Or should we consider this a case of just a bunch of executives being philanthropic with other people's money?? Please explain in detail from an Economic Standpoint.