Abby L. Harvey
GHG Monitor
9/19/2014
Governments have fallen behind the corporate world when it comes to pricing carbon, according to a report released by U.K.-based organization Carbon Disclosure Project (CDP) this week, which states that 150 major corporations worldwide have already adopted the practice of using an internal price on carbon in their investment decision making. US companies, including Dow Chemical Company, ExxonMobile and the American Electric Power Company, Inc., account for nearly 20 percent of that total, regardless of the country’s lack of a federal regulatory price on carbon. The report came out just a week before the UN Climate Summit to be held in New York, and should send a strong signal to those attending, CDP Executive Director Nigel Topping told GHG Monitor in a written response this week. "For the government ministers gathering at the UN summit next week the new CDP report showing how companies are already advanced in their use of carbon pricing gives them the evidence they need that business is ready for and wants strong policy,” Topping said. “The faster policy makers can create a level playing field with a robust, internationally-linked carbon market, the more opportunity there is for business to profit.”
The report found that 496 companies take part in global carbon trading schemes, including 96 U.S. companies. Further, 638 companies reported to the CDP that carbon pricing regulations would present an opportunity for their companies. “Any tax [or cap and trade scheme] that puts a price on carbon could drive new markets and/or grow existing ones. For example, interest in high-efficiency cogeneration facilities may increase. However to grow new markets, the cost on carbon would be key. In order to stimulate interest in our CO2 capture technologies the carbon price would need to be set high enough to make CCS economical,” Air Products & Chemicals, Inc. reported to CDP.
Several companies not directly involved in low-carbon energy generation also stated that a price on carbon would be beneficial. “Put simply, we can run our business better with the certainty of a price on carbon and government policies and incentives to help us to maximize energy efficiency and draw our energy from renewable sources. …. Potential financial implications of this opportunity include improved business planning with a price on carbon,” Levi Strauss & Co. reported to CDP.
Climate Summit Could Move Forward Carbon Price Discussion
The upcoming climate summit will provide an opportunity for global policy makers to step up as leaders, which means facing the challenge of implementing climate prices, World Bank Group Vice President and Special Envoy for Climate Change Rachel Kyte said during a panel discussion hosted by the Center for American Progress this week. “If you think about what leadership means on climate if you’re a head-of-state in 2014, it’s about getting your own economic house in order and sending the signals through the economy that will send signals for public and private investment,” Kyte said. “When you start stripping that back and you start looking at fiscal policy and economic policy then there are things that need to happen. One necessary, if insufficient, important policy measure is pricing carbon and getting your prices right.”
However, climate pricing is politically an unpopular idea, Kyte said, regardless of support by the private sector. “One of the things that we’ve been doing, working with a number of private sector platforms and initiatives is sort of saying, ‘Look, material leadership for a head of a state in 2014 is get your economy pointed in the right direction and price carbon … You can price carbon through taxes, through other fiscal policy measures, you can set up a trading system, and you can do many things … What you see happening, because it’s politically difficult to do, you see people saying, ‘Well, you know, maybe we should wait,’ and what we’ve been saying and what we’ve been putting out there is the economic case that there is nothing to be gained from waiting,” Kyte said. “What we are expecting to see next week is a remarkable leadership group, self-selected, of countries, states, cities and companies that are all pricing carbon already, intending to price carbon, working through how they are going to price carbon … It’s in their self-interest. It’s difficult to do but the science is clear, the economics are compelling, it’s got to be done.”
U.N. Official Optimistic Over Cooperation at Summit
Robert Orr, Assistant Secretary-General for Policy Coordination and Strategic Planning in the Executive Office of the U.N. Secretary-General, expressed optimism concerning cooperation at the summit. “We’ve been working to build the coalitions of actors public and private around each of those pieces of the pie. What is very striking is that these actors want to work together, the cooperative dynamic, even as there is huge competition in the marketplace and in the political marketplace in these spaces, there seem possibilities of reshaping the markets in each of these sectors,” Orr said. “Everyone can see value in working together even if they’re competing on a day-to-day basis and that’s what I think we’ll see next week.”
