Money To Burn: Companies Put A Price On Carbon

BY ON December 18, 2013

bar graph of major US companies who are putting their own prices on carbon pollution

This excerpt was written by Tim McDonnell for the Climate Desk: Most experts agree that slowing climate change is going to have to involve some kind of price on carbon dioxide pollution. Although the last attempt to pass a federal carbon price in the US failed in 2009, some of the world’s most-polluting companies haven’t let down their guard.

A report last week from the nonprofit Carbon Disclosure Project found that 29 companies that operate or are headquartered in the US are planning for the future by using their own internal carbon price. So how much do these companies think carbon pollution is worth? Not every company released a specific number, but we plotted those that did on the chart above.

As you can see, there’s quite a broad range, with the price officially recommended by the Obama White House ($37 per metric ton of carbon) falling north of the middle. For comparison, we also included the current prices in British Columbia (which levies a flat tax) and the European Union (which operates a carbon credit-trading market). An oversupply of credits on the EU market has recently driven the price to record lows, below where most economists believe it can be effective in curbing emissions.

But a decision yesterday by the European Parliament to slash the number of available credits is expected to drive the price up 35 percent over the next year. For most companies, the purpose of adding a hypothetical carbon tax to their balance sheets is to prepare for what could become a significant expense in the future. This is especially true for energy companies that produce large amounts of carbon pollution and would therefore be hit hardest by a carbon price; ExxonMobil, with the highest reported internal price, is the world’s second-biggest corporate carbon polluter, while non-energy companies like Walt Disney and Microsoft reported lower internal prices.

Zoe Tcholak-Antitch, a spokesperson for CDP North America and its former director, said working on the assumption of a high carbon price is “a very prudent approach” for big energy producers, because it builds a degree of flexibility into their budgets.

“ExxonMobil invests billions of dollars in energy projects which take decades to plan and execute,” company spokesperson Alan Jeffers said in a statement. “For the purposes of our business planning we assume that governments will continue to gradually adopt a wide variety of more stringent policies to help stem greenhouse gas emissions.”

In other words, the company isn’t actually shelling out $60 for each ton of carbon it emits, but the bottom line ExxonMobil brass see in revenue projections for the future accounts for the price as if it was. That way, if and when a price is set, the company’s balance sheet will be prepared to absorb even a relatively high new cost… READ FULL ARTICLE HERE

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TOPICS: Carbon Pollution, Climate Change