Oil and gas giants ask UN for global carbon price
Six of Europe's largest oil and gas companies have written to the UN asking for the establishment of an international carbon price.
In an open letter to Christina Figueres, the executive secretary of the UN Framework Convention on Climate Change (UNFCCC), the six companies asked for “open direct dialogue with the UN and willing Governments”.
Specifically the fossil fuel giants – including Shell, and BP – want to create and implement a "workable approach to carbon pricing", adding that their global reach and century-plus of experience would help inform such a policy.
In the letter, published in Monday’s Financial Times, the coalition said: “We want to be part of the solution”.
“Low carbon business models and solutions are fragile until they reach critical size, but linked with carbon pricing systems worldwide, uncertainty would be reduced and such solutions will start to create value for businesses more rapidly.”
“Pricing carbon obviously adds a cost to our production and products - but carbon pricing policy frameworks will continue to provide our businesses and their many stakeholders with a clear roadmap for future investment, a level playing field across all geographies and a clear role in securing a more sustainable future
Front page of Financial Times UK edition for Monday June 1. pic.twitter.com/aAWpfk0OeW— Financial Times (@FT) May 31, 2015
The heads of France’s Total, Norway’s Statoil, Italy’s Eni and Britain’s BG Group also signed the letter, but US giants Exxon and Chevron declined to join the initiative, saying they were well able to express their views on their own.
Both companies held annual meetings last week, where resolutions to appoint climate experts as directors were supported by around 20% of shareholders at both companies.
International non-profit The Climate Group called the sending of the letter a “symbolic moment” and an “important if not universal shift”, ahead of the Paris talks in December.
Climate Group CEO Mark Kenber said: “[The letter] helps increase the likelihood of a positive outcome at COP21 by sending a signal to the wider business community, and showing that the direction of travel is towards comprehensive and effective regimes regulating carbon emissions.
“We're seeing businesses apparently taking a lead in policy and innovation. What many companies have been saying is that a clear, transparent framework will help them be confident in making long-term plans and investments, and this latest initiative reiterates that.
“We believe businesses across the board have a key role to play in supporting a strong low carbon economy, and would therefore encourage them to support calls for action and strategies for decarbonisation of the economy.”
Road to Paris
Jan Ahrens, director of market analysis at ICIS Tschach - specialist analysts in the emissions trading space - added: "The statement clearly shows that companies are not afraid of carbon pricing mechanisms in general. The key issue for global players is uncertainty about the future developments and fragmentation. Uncertainty is especially a problem when long-term investment strategies are taken, while fragmentation influences significantly international competitiveness of companies and the risk of carbon leakage. A global carbon price would most likely handle both problems effectively.
"However, while a global carbon price reduces emissions at lowest cost and would be the most effective solution, it will be a tough political sell in some countries to invest money abroad in order to reduce emissions. Cap and trade schemes in the world (except the EU ETS) by now only allow the use of domestic offset credits – even though they are potentially much more expensive than credits from abroad."
The publication of the letter also coincides with the opening day of a climate negotiation conference in Bonn.
The 10-day conference will see officials continue to work on the text of the universal climate agreement scheduled to be signed in Paris.