Energy majors call for carbon pricing

1st June 2015

Leaders of six major energy companies are calling for governments around the world to agree a price for carbon at the Paris climate talks at the end of the year.

In a letter to UNFCCC executive secretary Christiana Figueres, BG Group, BP, Eni, Royal Dutch Shell, Statoil and Total say their operations are already exposed to a carbon price through participation in existing carbon markets and their use of a shadow price of carbon when taking investment decisions.

“Yet, whatever we do to implement carbon pricing ourselves will not be sufficient or commercially sustainable unless national governments introduce carbon pricing even-handedly and eventually enable global linkage between national systems,” the letter states.

“Some economies have not yet taken this step, and this could create uncertainty about investment and disparities in the impact of policy on business,” it continues.

The energy companies say they will work with the UN and governments to develop how a global system of carbon pricing could work. They also pledge to copy the letter to key contacts among investors, governments, civil society and staff.

“Pricing carbon obviously adds a cost to our production and our products, but carbon pricing policy frameworks will contribute to providing our businesses and their many stakeholders with a clear roadmap for future investment, a level playing field for all energy sources across geographies and a clear role in securing a more sustainable future,” the letter concludes.

The energy companies’ support for carbon pricing follows a similar call from over 6.5 million companies from more than 25 global business networks at a conference in Paris last week.

It comes as further climate negotiations open in Bonn, Germany. Negotiators will be working on editing the draft 84-page text containing all the options for an agreement in the French capital in December.

Figueres said: “With some 200 days to the UN climate convention conference in Paris, the growing momentum for change and for action is rapidly gaining ground across countries, companies, cities and citizens.

“News of yet another group of stakeholders committing to long-term emission reduction targets or ambitious investments in renewable energies is emerging almost daily – building confidence and a sense of ‘can do’ among nations as we enter the final six months of 2015,” she said.

Further national emissions reduction pledges, or intended nationally determined contributions (INDCs), are expected to be published during the Bonn talks.

INDCs have so far been published by the EU as well as the US, China, Canada and Mexico. But these are unlikely to be ambitious enough to keep global temperature rises under two degrees centigrade, according to the Grantham Research Institute for Climate Change in a paper published in May.


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