Big business leads the way on carbon pricing
Major corporations are outpacing governments by preparing for a financial future with carbon pricing.
A report from the non-profit organisation CDP (formerly know as the Carbon Disclosure Project) found that 150 major corporations, including 24 in the UK, are already imposing an internal price on the heat-trapping emissions.
For example, BP told researchers: “We include assessments of greenhouse gas mitigation opportunities and our own shadow carbon price as a sensitivity in evaluating the economics of all new capital projects and investments.”
A carbon price is a cost applied to C02 emissions to encourage polluters to reduce the amount they emit. Many economists and businesses agree that a carbon price would be an effective market solution to climate change. For example, a Unilever spokesperson told CDP: “Unilever believes that carbon pricing is a fundamental part of the global response to climate change. Unilever also recognizes that without it, Unilever is unlikely to be able to meet its own greenhouse gas reduction targets.”
However, many of the surveyed companies were frustrated by the absence of a unilateral international agreement, with the report concluding that that ‘these companies are calling for clear pricing and regulatory certainty to help them plan their climate-related investments, and they want to see more certain, internationally linked carbon markets’.
Tesco told CDP researchers: “Continued lack of international agreement to tackle climate change means different levels of ambition and carbon costs around the world as well as uncertainty about future policy.
“This will affect Tesco’s investment decisions, and could reduce the return on investment of our existing energy efficiency and renewable energy investment.”
The best example of international collaboration is perhaps the EU Emissions Trading Scheme (ETS), which deals carbon emission permits and aims to reduce the cap by at least 1.74% each year. However, elsewhere, US Congress has repeatedly blocked efforts to introduce a national price on carbon, while Australia scrapped a carbon tax earlier this year.
The report comes one week before global business and political leaders convene in New York for a UN climate summit. The IMF and the World Bank are calling for carbon pricing to be a key strategy.
© Faversham House Ltd 2022 edie news articles may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent.