The CEOs of six of the largest energy companies worldwide want national governments to put a price tag on greenhouse gas emissions.
In a letter addressed to Christiana Figueres, executive secretary of the U.N. Framework Convention on Climate Change, the authors call upon the United Nations and countries to "open a direct dialogue" on climate change and carbon pricing, "including at the UNFCCC negotiations in Paris and beyond."
The authors — the CEOs of European oil and gas companies BG Group PLC, BP PLC, Eni SpA, Royal Dutch Shell PLC, Statoil and Total SA — want the international community to create national and regional carbon pricing mechanisms and a global network that could "eventually connect national systems."
The letter, sent also to French Foreign Minister Laurent Fabius, doesn’t specify a preference for a carbon tax policy or a cap-and-trade marketplace.
"Climate change is a critical challenge for our world," the letter reads. "We acknowledge that the current trend of greenhouse gas emissions is in excess of what the IPCC says is needed."
To serve consumers and meet growing demand, the companies have shifted to natural gas, invested in carbon capture and storage (CCS) technology and improved their energy efficiency, the letter reads. The authors call for more government direction, placing responsibility on international leaders.
"For us to do more, we need governments across the world to provide us with clear, stable, long-term ambitious policy frameworks," the CEOs write.
"Low-carbon business models and solutions are fragile until they reach critical size," they continue. "Whatever we do to implement carbon prices ourselves will not be sufficient or commercially sustainable unless national governments introduce carbon pricing even-handedly and eventually enable global linkage between national systems."
In a statement, Jim Yong Kim, president of the World Bank, welcomed the announcement: "We need more business leaders from this industry and others to support putting a price on carbon."
Yet Charlie Kronick, of Greenpeace’s U.K. division, said emissions pricing doesn’t go nearly far enough to mitigate climate change. "Carbon pricing will only make a marginal contribution," he said in an email, sarcastically calling the six firms’ announcement a "solution."
Fred Krupp, president of the Environmental Defense Fund, took a more sanguine tone. "EDF is pleased to see this public statement of support for a price on carbon," he said. An emissions price, he added, can "drive reductions as efficiently and as fairly as possible."
Exxon: We want a ‘uniform and stable’ carbon price
The letter comes on the heels of investors’ submitting a spate of shareholder resolutions about climate change this proxy season, (ClimateWire, May 27).
And climate was a central topic at annual corporate meetings for Chevron Corp. and Exxon Mobil Corp. last week, though proposals from stockholders worried about global warming received minimal support — underscoring a difference between how U.S. and European firms are addressing climate risks (ClimateWire, May 28). The top executives at both U.S. energy majors said they wouldn’t sign onto a group stance on climate change.
"We’re not going to be disingenuous about it. We’re not going to fake it," Rex Tillerson, Exxon’s CEO, said at the annual company meeting Wednesday, after a shareholder noted that rival European firms have backed shareholder resolutions on climate change. "Just speaking out to be speaking out about it doesn’t seem to be particularly helpful to me."
Richard Keil, an Exxon spokesman, said company leaders are aware of the European letter. Exxon, he said, wants a "uniform and stable price on carbon."
Asked about the company’s preferred carbon pricing mechanism, he said the company supports "a revenue-neutral carbon tax that is understandable and predictable for everybody."
Climate policies should be drafted on a global scale, use market-based mechanisms –"rather than technology mandates" — and "create a level competitive playing field among energy sources between countries," said Daren Beaudo, a ConocoPhillips spokesman, in an emailed response. And Melissa Ritchie, of Chevron Corp., also provided the following statement: "We believe that taking prudent, practical and cost effective action to address climate change risks is the right thing to do."
Last month, German Chancellor Angela Merkel said the European Union’s Emissions Trading System (ETS), the world’s biggest carbon market, should be deployed worldwide.
In May, E.U. leaders also agreed to reform the system — plagued by an oversupply of emission credits and minimal incentive for high-emitting firms to change their investment and day-to-day practices — in January 2019.
In 2005, when the market began, a per-metric-ton credit traded for between about €15 to €30.
After plunging during the financial crisis of 2007 and rising again, prices for the past several years have remained below €10 — a price many market watchers say is too low to shift industries to low-carbon energy sources.
Reporter Mike Lee contributed.
Correction: An earlier version of this article had Fred Krupp, president of the Environmental Defense Fund, listed as Ed Krupp.