Business leaders demand global carbon price at Doha

More than 100 of the world’s largest companies are calling for governments to bring in a global carbon price to drive the huge investment needed to deliver substantial reductions in greenhouse gas emissions.

Shell, Unilever, EDF Energy, Statoil, Swiss Re, and Skanska are among those that have endorsed the Carbon Price Communiqué, coordinated by the Prince of Wales’s Corporate Leaders Group on Climate Change, ahead of the Doha climate summit at the end of the month.

The businesses believe a market-driven carbon price would offer regulatory certainty and create the level playing field with conventional energy sources developers needed for large-scale low-carbon investment and innovation.

“Putting a price on CO2 emissions should mean that the lowest-cost CO2 emission reduction measures are implemented first and that all measures are used,” said Graham van’t Hoff, chairman of Shell UK. “Governments at the UN climate conference should focus on carbon pricing as a key policy objective.”

Critics, including the CBI, have said carbon pricing is not sufficient to accelerate the transition to a low-carbon economy, arguing that other long-term measures such as upping nations’ carbon reduction ambitions, a course of action the EU is considering, are needed in tandem.

While the companies admit carbon pricing is “not a silver bullet”, they say “the scope for change is enormous” when it is used in combination with other green economic policies.

They also call for the existing carbon pricing systems in a number of countries and regions to be expanded. Earlier this year, the EU announced tie-ups between its emissions trading scheme and the nascent carbon market in Australia, which is also in talks about a link with the New Zealand scheme and a new cap-and-trade system in California. New markets springing up in China and South Korea also offer potential future links.

However, much hinges on talks at Doha where countries will look to thrash out how long the world will extend the Kyoto Protocol, a 1998 agreement that underpins the global carbon markets. The EU and Australia are poised to sign up to an extension, but it remains to be seen if the world’s largest emitters – China and the US – will play ball.

EU climate action commissioner Connie Hedegaard welcomed the communiqué, noting the continued downward trend in the bloc’s emissions, which dropped 2.5 per cent last year despite overall economic growth of 1.5 per cent.

“The European experience confirms that putting a price on carbon stimulates emissions reduction,” she said. “We are planning to link our system with Australia’s and encourage more countries to join the [emissions trading] family in order to drive down emissions globally.”

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