Oil majors BG Group, BP, Eni, Royal Dutch Shell, Statoil and Total are jointly calling for international governments and the United Nations to introduce carbon pricing systems which could eventually be internationally connected.
In what seem like a counter intuitive move for oil and gas producers, the firms say carbon pricing systems which create clear, stable, ambitious policy frameworks would reduce uncertainty and encourage the most cost effective ways of reducing carbon emissions widely.
Specifically, this means making natural gas look like a more attractive option, says the six firms. The attraction of natural gas, they say, is that it is cleaner than burning coal for electricity generation and can provide a base load against intermittent renewables electricity supply. By having a framework, set out by national governments and eventually internationally connected, oil firms would have a “level playing field” on which to make investment decisions.
According to the World Bank, a price on carbon gives an “economic signal” for polluters to decide for themselves whether to discontinue their polluting activity, reduce emissions or continue polluting and pay for it.” A price on carbon currently exists as either an emissions trading system or carbon taxes. The World Bank says nearly 40 countries have carbon pricing mechanisms or are planning to implement them, including China, Mexico, Chile, the EU.
In a joint letter to the UN Framework Convention on Climate Change (UNFCCC) Executive Secretary and the President of the COP21 climate meeting, the six firm’s CEOs, say: “Our industry faces a challenge: we need to meet greater energy demand with less CO2.
“We acknowledge that the current trend of greenhouse gas emissions is in excess of what the Intergovernmental Panel on Climate Change (IPCC) says is needed to limit the temperature rise to no more than 2 degrees above pre-industrial levels. The challenge is how to meet greater energy demand with less CO2. We stand ready to play our part.
“We firmly believe that carbon pricing will discourage high carbon options and reduce uncertainty that will help stimulate investments in the right low carbon technologies and the right resources at the right pace.”
However, in order to do this, national governments need to provide a framework, they say. “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 CEOs’ letter says. “Some economies have not yet taken this step, and this could create uncertainty about investment and disparities in the impact of policy on businesses.”
The letter has been signed by CEOs Helge Lund, BG Group; Bob Dudley, BP; Claudio Descalzi, Eni; Ben van Beurden, Royal Dutch Shell; Eldar Sætre, Statoil; Patrick Pouyanné, Total.
According to the World Bank, the world’s emissions trading schemes, in 2014, were valued at about US$30 billion, with China housing the world's second largest carbon market, covering the equivalent of 1.1 billion tons of carbon dioxide emissions.
The UNFCCC’s annual COP21 (Conference of Parties), also known as the 2015 Paris Climate Conference, is due to take place in Paris this December. Its aim , for the first time in over 20 years of UN negotiations, is to achieve a legally binding and universal agreement on climate, with the aim of keeping global warming below 2°C.
Subscribe
