07 Dec Why wait for government to put a price on carbon?
Thank you @Doug Scott (Vacom Inc) for this interesting question:
Why is it that companies are not, themselves, putting a price on carbon? If we have reason to think that companies’ fortunes will rise and fall in response to sound planning, why wait for the government? Why not value carbon internally as a means of making more responsible business plans?
Good question, Doug!
Last week I was glad to have Doug’s input on a market study that I’m working on to address the coming HFC phaseout in California. I think Doug grew up doing refrigeration engineering, quite literally. So I knew that before I called he will have put in a lot of thought on the topic of CO2, low GWP refrigerants, and related topics. So, after he endured my questions for nearly half an hour, I opened up the floor and said, basically, “what have I missed Doug?”
We all know that valuing carbon isn’t a new idea but what I liked about Doug’s take on it was more like – hey, governments aside, we should be putting a price on carbon just to hedge, at a minimum. Or more likely carbon reduction is probably an enduring growth market.
Recently I’m happy to say that there’s growing evidence that companies may be doing just that. Examples I’ve noted lately include traditionally carbon emitters such as Shell and Engie (formerly Gaz de France, GDF). Both have made strong commitments to reducing their carbon footprints.
Engie’s CEO, Isabelle Kocher has charted a course aimed at complete decarbonization. “The 21st century will mark the end of fossil fuels” says Kocher – a bold statement for a former natural gas company.
And just this week Shell announced that it will begin to tie executive compensation to achieving climate change goals. Not bad for a couple of oil and gas companies.
Then we got more good news from the private sector today when leaders of over 50 global companies, spanning 150 countries signed an open letter to COP24 pledging support to address climate change:
“We are committed to climate action. We stand ready to fast-track solutions to help you deliver on an enhanced and more ambitious action plan to tackle climate change and meet the goals set out at the 2015 Paris Climate Agreement.
We know this is possible.”
OK my cynical friends, I’m well aware that these are just words. But to meet a goal, you need a plan, and a plan starts with a commitment. And we’re finally getting that, at least from corporate governance, and local governance (such as the US Climate Alliance joined by 20 states), if not our federal government.
So, while the science and tracking of climate change continue to deliver bad news, maybe we’re finally getting the right people to the table. Meanwhile our president has, disappointingly, wandered off stage.