BUSINESS BACKING FOR EFFECTIVE CARBON PRICING HAS REACHED A TIPPING POINTWe Mean Business
In tandem with the demand for policymakers to set long-term targets came a strong consensus on the need for effective carbon pricing as a tool for national policymakers, as well as for business leaders and investors.
A thousand CEOs have signed the World Bank’s declaration calling for carbon pricing and over 70 countries support it. Hundreds of companies already use a shadow price on carbon internally. Eighty percent of the top global companies report carbon reduction targets and are planning emissions cuts of more than 6% per year to limit global temperature rise to 2 degrees Celsius. The call for carbon pricing is telling governments that business wants certainty.
And we saw that over and over again in Davos. At one CEO roundtable, every single business leader raised his or her hand—even those in the energy sector—when asked whether they agreed that carbon pricing was part of the solution.
Even the context of cheaper oil did not deter support for pricing carbon. In fact, for many business leaders, the drop in oil price is seen as a great opportunity to get rid of fossil-fuel subsidies and to redirect subsidies to low carbon investment.
US Secretary of State John Kerry said, “The energy market that we are staring at, that is the solution to climate change… is the mother of all markets.”
Low oil prices are killing billions of dollars of investment in fossil fuel exploration and extraction. The cost of extraction of fossil fuels is going up, while the cost of renewable energy is going down. During one session, Feike Sijbesma, CEO and Chairman of Royal DSM, spoke about why countries have a compelling reason to put a price on carbon: cheap oil prices. “Is this not a present for politicians? I would say don’t waste this moment.”