Europe's largest oil companies call for carbon price: G7 and businesses must up ambition, says Mark Kenber

Reading time: 5 minutes
1 June 2015

LONDON: As Europe's largest oil companies call for carbon pricing systems at the regional, national and international level in an open letter to the United Nations, The Climate Group says businesses must support strategies to decarbonize the economy.

Signed by chief executives of BG Group, BP, Eni, Royal Dutch Shell, Statoil and Total, the letter which was published in the Financial Times today says the oil industry is already curbing emissions through carbon capture and storage, energy efficiency and renewable energy, but requires "clear, stable, long-term, ambitious policy frameworks" from governments - including a price on carbon - to drive further low carbon investment.

Mark Kenber, CEO, The Climate Group, comments: "This is a symbolic moment, and demonstrates an important if not universal shift. It reflects a growing realization within influential sectors of the fossil fuel industry of a need to adapt to both market and climate realities.

"It 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 toward comprehensive and effective regimes regulating carbon emissions.

"Policymakers and negotiators should now feel encouraged to up their own ambition. There are still a number of major emitters who have yet to submit their INDCs, and in the case of some of those already announced there is clearly scope for going further. The G7 summit should take this as a cue to look at global carbon pricing and strategies for decarbonization of the  economy. 

"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 decarbonization of the economy."

In the letter, which comes ahead of the COP21 climate talks which will take place in Paris this December and where a global deal will be agreed, the oil leaders write: "If governments act to price carbon, this discourages high carbon options and encourages the most efficient ways of reducing emissions widely, including reduced demand for the most carbon intensive fossil fuels, greater energy efficiency, the use of natural gas in place of coal, increased investment in carbon capture and storage, renewable energy, smart buildings and grids, off-grid access to energy, cleaner cars and new mobility business models and behaviors.

"Our companies are already exposed to a price on carbon emissions by participating in existing carbon markets and applying ‘shadow’ carbon prices in our own businesses to test whether investments will be viable in a world where carbon has a higher price."

They conclude: "We acknowledge the long-term challenge and appreciate that this will be transformative across the energy sector. Over many decades, our industry has been innovative and has been at the forefront of change. We are confident that we can build on our trajectory of innovation to meet the challenges of the future."

One way businesses that work with The Climate Group are already transitioning to a low carbon future is by going 100% renewable, through our RE100 campaign.

During Climate Week Paris last month, which was conevened by The Climate Group, three new companies, Infosys, Unilever and Marks and Spencer joined RE100 alongside some of the world’s most influential companies including IKEA, Swiss Re, BT, Formula E, H&M, KPN, Mars, Nestlé and Philips, which are all taking clear steps to be part of and drive a global clean energy revolution.

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Image by Sergio Russo

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