From Exxon to Jack Black: The call for a global carbon price is gathering pace
As the Paris Agreement nears its crucial ratification stage, individuals, organisations and entire nations are beginning to ease away from fossil fuels in their energy consumption habits. Now, with COP22 in Marrakech just around the corner, the call for a carbon price is becoming hard to ignore.
That historic Paris accord in December established the foundation of an unparalleled global movement to combat climate change. But despite declaring the 2C global warming limit for countries to stay within, many companies and individuals have been left clamouring for a global price to be placed on carbon.
A carbon price could arise in many ways. The model ideate would see a direct fee placed on all emissions across the globe, with revenues then transferring through to the research, development and deployment of renewable energy projects, or returned to taxpayers via ‘dividend’ checks.
The price is right
The build-up to last December’s COP21 conference saw world leaders such as German Chancellor Angela Merkel, French President François Hollande and California Governor Jerry Brown all calling for a global carbon price, but the concept was left out of that frantic, last-minute agreement process.
However, in June of this year, COP21 President and co-chair of the Carbon Price Leadership Coalition (CPLC) Ségolène Royal explained that efforts to promote the viability of carbon pricing had finally paid dividends. Already, 26 governments are part of the CPLC and 12% of global emissions are currently covered by pricing mechanisms. The new goal is to eventually cover 50% of the world's carbon emissions by pricing systems by 2050.
Royal's home nation of France is currently operating with a €56-per-tonne carbon price – which will grow to €100 per tonne by 2030 – while also creating a floor price for carbon in the electricity sector at €30. According to Royal, the floor price compliments the soon-to-be revamped Emission Trading System (ETS) so well that the floor price should be extended across the whole of Europe.
Impressively, the traction that carbon pricing is gaining on an international front is still largely dwarfed by a private sector that is ready and willing to drive the green economy transition. According to CDP, the number of large companies that use an internal carbon price will pass the 1,000 mark within the next year, with 437 companies already operating with one as of 2015.
Considering that this number sat at just 150 in 2014, it comes as no surprise that the carbon pricing movement is beginning to appear on the agendas of companies, regional governments and – as France has highlighted – countries across the globe.
What is perhaps surprising is the amount of energy companies that are now calling for a global price to implemented. As of last year, CDP has reported that 18 major energy firms have set internal carbon prices, while the likes of Exxon and BP have claimed that a global carbon price is needed to counteract spiralling emissions over the next 20 years.
Exxon plays the long game
Despite backlash from investors, Exxon continues to rally against growing external pressure to adapt to a low-carbon pathway, warning that the world is “going to have to continue using fossil fuels, whether they like it or not”.
However, the company has actually been using a carbon price, which reaches $80/tonne in some areas of the company, for a few years now. In fact, since 2009, Exxon has been lobbying to introduce a federal carbon price in the US.
As of December 2015, a Bill has been introduced into Congress which lays out the blueprints of a carbon pricing system through to 2035. While the Bill is currently stuck in committee, it does raise the question as to why Exxon would be backing it.
Research from MIT suggests that, in order to move away from spiralling CO2 levels - which have already passed the symbolic barrier of 400 parts per million (ppm) this year - the cost will likely be around $120/tonne higher than the maximum $80/tonne that Exxon are currently operating under.
While Exxon is angling for a carbon price in an effort to lower the costs of a federal pricing plan, it is at least still echoing the sentiments made Tesla chief executive Elon Musk in regards to a robust pricing mechanism. Musk has been critical of politicians in the past, claiming that they were bowing to the "unrelenting and enormous" lobbying power of the fossil fuel industry.
But with the upcoming US election slowly evolving into a battle between the climate-conscious and the climate-ignorant, recent research from the Carbon Tax Center has revealed that the public are also aware of the potential of a carbon price.
A willing public
According to the research, 51% of voters who align themselves as Trump supporters would also support a carbon tax on the private sector. In contrast, 70% of Democrat voters support the idea and, interestingly, the support for a carbon tax falls slightly if the revenues were to be returned to taxpayers.
With the public largely supporting this move, it seems the “unrelenting” lobbying power that Musk refers to may be softened slightly be public awareness. But if the recent Olympic Games in Rio have taught us anything, it’s that high-profile events and celebrities can act as a catalyst for climate awareness.
The opening ceremony of Olympics highlighted the serious implications of climate change, and as our Google Trends analysis proved, the public took note. During and in the immediate aftermath of the climate change video that played out at the Opening Ceremony, search interest for topics such as rising sea levels reached record highs (as illustrated in the graph below).
This spike in public awareness of global climate issues was also evident during the Oscars earlier this year, where Leonardo DiCaprio ended a 22-year wait to scoop the best actor award. His acceptance speech urged people across the globe to act on the "urgent threat" of climate change and if the aftermath of the event, tweets including the phrases “global warming” or “climate change” rocketed by 636%.
Years of Living Dangerously
Now, it seems that comedian Jack Black, alongside his TV show Years of Living Dangerously partner Cecily Strong, is the latest celebrity to preach about climate change, but Black is focusing solely on the concept of a carbon price.
The Years of Living Dangerously show and cast are partnering with activists to raise awareness of the policy and the #PutAPriceOnIt campaign is specifically targeting students, who are likely to be exposed to climate-related ramifications the most.
With a recent survey revealing that strong consumer demand in new products and services from millennials will create a significant amount of value for companies who embrace the younger generations, is now the time for campaigners targeting policy reforms to appeal to the first "digital natives and a globally empathetic generation"?