It turns out the White House and major American businesses may be converging on how to assess the damage greenhouse gas emissions do to the global climate.
According to a new report by the environmental data company CDP, in 2013 at least 29 companies either based or operating in the United States factored a price on carbon into their long-term business planning. And in 2010, the Obama Administration released the government’s estimates for that same price, to be used as a factor in rulemaking decisions by federal agencies.
The global warming driven by human-caused carbon emissions will cause various results, including droughts, floods, heat waves, shifting weather patterns, stronger storms, disrupted food supplies and rising seas. The purpose of the price in both instances is to quantify the economic costs of those effects.
Significantly, the companies using an internal carbon price include the five oil giants – ExxonMobil, ConocoPhillips, Chevron, BP, and Shell – along with other notables like Google, Microsoft, General Electric, Walt Disney, Wells Fargo, DuPont, and Delta Air Lines.
The specific prices they estimated were also striking: $40 per ton of carbon emissions for BP; $60 for ExxonMobil, and $40 for Shell. Xcel Energy pegged it at $20, Walt Disney at $10 to $20, and ConocoPhillips’ estimate ran anywhere from $8 to $46 depending on various factors. The US government’s midline estimates were $37 and $57 for 2015*. CDP also reviewed the carbon prices already in place in other countries around the world, which generally fell into the same range – and in a few instances much lower and higher.
Currently, the United States does not put any price on carbon. The International Monetary Fund estimates that failure effectively subsidises fossil fuels to the tune of $502 billion annually – the biggest of any country in the world. The result is a massive market distortion, because the costs of climate change are not being factored into the daily decisions and transactions of everyone in the economy. The most direct way to place a price on carbon is either a carbon tax or a cap-and-trade system like the one Congress considered in 2009 and then abandoned. But the regulations to cut carbon emissions from power plants would implicitly, if not directly, place a price on those emissions as well.
Of course, the businesses’ use of an internal carbon price is an act of self-interest rather than advocacy. CMS Energy Corporation, for instance, noted it factored into its decision to start up a natural gas power plant, and to begin shuttering several coal-fired ones. And the CDP report quotes many of the companies emphasising the price’s use as a guide in investment and other decisions.
“It’s climate change as a line item,” Tom Carnac, North American president of CDP, told The New York Times. “They’re looking at it from a rational perspective, making a profit. It drives internal decision-making.”
Publicly, some of these companies – ExxonMobil in particular – have been long-time sceptics of climate change, and have financially supported efforts to beat back the policies aimed at addressing it. Many of those companies are also regular contributors to the Republican party, which opposes efforts to cut greenhouse gas emissions and has sought to derail the White House’s carbon price. Consequently, many observers on both sides of the issue see the companies’ internal use of a carbon price as a significant break between business’ practical self-interest and the ideological position of the GOP and its conservative supporters – a sign the concrete financial infrastructure that supports opposition to climate policy is simply tiring out.
Across the financial world, there’s growing concern that massive amounts of money are invested in fossil fuel reserves that can never be exploited. Bloomberg LP recently released a financial tool to help investors calculate their carbon risk, while movements across the United States and other countries are pushing institutions to disentangle themselves from fossil fuel production. Various carbon-pricing mechanisms are already operating in numerous countries, and the growth of renewable energy continues to rocket upwards. In other words, the need to account for carbon emissions’ climate damage is no longer seen as a mere internal question of government policy – it’s taking on a collective life of its own.
Being hard-nosed business leaders, Exxon Mobil, BP, Google, and all the rest of them are simply acknowledging that reality.
Originally published on ClimateProgress. Reproduced with permission.
*All prices are in US dollars. $US1 = $A1.10