Dear UN, put a price on carbon. Yours truly, Big Oil. (+video)
Major European oil firms have called on world leaders to put a global price on carbon. It's a sign of growing unity around a potential tool for slowing climate change, but not everyone is on board.
Six of the world's largest oil producers are making what might seem like an unusual request coming from an industry that is often skeptical of government regulation: They're asking world leaders to make their product more expensive by putting a price on carbon.
Environmentalists and climate leaders have long argued that carbon pricing would discourage the emission of climate-altering gases into the Earth's atmosphere and help curb the worst effects of climate change. Increasingly, fossil fuel groups are joining in that call, despite the billions in profits they earn from their carbon-based products.
In a letter to the United Nations Monday, oil and gas groups made their clearest push for a carbon price yet. The leaders of European energy firms BP, Eni, Statoil, Royal Dutch Shell, Total, and BG Group asked governments across the globe to provide "clear, stable, long-term, ambitious policy frameworks" in which carbon pricing is a "key element." The letter comes just months ahead of international climate negotiations in Paris.
It also comes as global oil prices hover around $65 per barrel, down by roughly half from a year ago. That cheaper oil environment means added carbon costs would likely have less of a negative economic impact than if oil were $100 per barrel.
"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 group's letter reads. "The challenge is how to meet greater energy demand with less CO2. We stand ready to play our part."
Some might see the move as a pure public-relations ploy. Critics often brand major oil companies as greedy, polluting, climate-denying megacorporations, and at least two of the signatories are struggling to overcome recent high-profile environmental incidents. Associating themselves with global climate efforts is one way to rebrand themselves as more environmentally friendly.
But there are other reasons why major oil firms might want a price on carbon. Multinational corporations like predictability and uniformity in policies. If the entire world agrees on a unified price of carbon, it means BP, Shell, and others will have to spend less time and money navigating a web of divergent policies across the globe. Carbon pricing would encourage more power sectors around the globe to switch from carbon-heavy coal to cleaner-burning natural gas, which would benefit oil companies like Shell that are investing increasingly in natural gas. What's more, many fossil fuel firms employ top scientists who are well aware of the risks of climate change and are interested in meeting global energy demand in cleaner, more efficient ways.
"Our companies are already taking a number of actions to help limit emissions, such as growing the share of gas in our production, making energy efficiency improvements in our operations and products, providing renewable energy, investing in carbon capture and storage, and exploring new low-carbon technologies and business models," the letter reads. "These actions are a key part of our mission to provide the greatest number of people with access to sustainable and secure energy."
Of course, not all fossil fuel firms are on board. American firms Exxon Mobil and Chevron are notably absent from Monday's letter, highlighting a longstanding transatlantic divide between how oil supermajors approach climate policy. Public support for climate efforts tends to be stronger in Europe, which might explain why Shell, BP, and other European firms have been more assertive calling for a carbon price.
Indeed, Exxon Mobil shareholders voted last week against a measure to place a climate change expert on the company's board, saying it would "dilute the breadth needed by all directors to make informed decisions for the company.” Rex Tillerson, the company's chief executive, dismissed the economic potential of renewable energy, telling investors "We choose not to lose money on purpose," as reported by the Associated Press.