“A Rational Perspective”: Corporations Prepare for Carbon Limits

December 7, 2013


Go figure. Major corporations way ahead of the Tea Party base (I am shocked, shocked….).

Getting ready, and in some cases, actually imposing their own carbon limits – to make themselves more competitive.


The development is a striking departure from conservative orthodoxy and a reflection of growing divisions between the Republican Party and its business supporters.

A new report by the environmental data company CDP has found that at least 29 companies, some with close ties to Republicans, including ExxonMobil, Walmart and American Electric Power, are incorporating a price on carbon into their long-term financial plans.

Both supporters and opponents of action to fight global warming say the development is significant because businesses that chart a financial course to make money in a carbon-constrained future could be more inclined to support policies that address climate change.

But unlike the five big oil companies — ExxonMobil, ConocoPhillipsChevronBP and Shell, all major contributors to the Republican party — Koch Industries, a conglomerate that has played a major role in pushing Republicans away from action on climate change, is ramping up an already-aggressive campaign against climate policy — specifically against any tax or price on carbon. Owned by the billionaire brothers Charles and David Koch, the company includes oil refiners and the paper-goods company Georgia-Pacific.

The divide, between conservative groups that are fighting against government regulation and oil companies that are planning for it as a practical business decision, echoes a deeper rift in the party, as business-friendly establishment Republicans clash with the Tea Party.

Tom Carnac, North American president of CDP, said that the five big oil companies seemed to have determined that a carbon price was an inevitable part of their financial future.

“It’s climate change as a line item,” Mr. Carnac said. “They’re looking at it from a rational perspective, making a profit. It drives internal decision-making.”

American Conservative:

This information comes from a recent report issued by the Carbon Disclosure Project, a nonprofit that specializes in organizing environmental information. The CDP report finds major oil companies, Wells Fargo, Wal-Mart, Walt Disney Company, automotive supplier Delphi, General Electric, energy companies like Duke, and even technology companies such as Google and Microsoft all including a future carbon price in their planning. The internal company projections range across industries, but generally it appears that the oil companies are forecasting the highest carbon prices in their internal planning, with BP pricing $40 per ton of carbon dioxide, Exxon Mobil $60, and Royal Dutch Shell $40.

At least three companies, Disney, Microsoft, and Shell, already implement their own internal carbon taxes. According to the Guardian, these companies have been enforcing the price within their own organizations in order to drive down their carbon footprint and increase efficiency. Shell has the highest price of the three, and so only uses the price for planning purposes; no money actually moves around. Nevertheless, Shell officials told the Guardian that they have declined pursuing carbon-intensive projects that a $40 per ton price makes unattractive. Disney, on the other hand, prices and taxes themselves. The funds raised from the tax deposited in their “climate solutions fund.” Currently, they price approximately $10-20 per ton, and have raised $35 million. Microsoft has the most aggressive goal, of seeking zero net emissions this year, and has the correspondingly lowest price, approximately $6-7 per ton.

While there are a variety of motivations for aggressive carbon pricing, the oil companies, such as Shell, are seeking to be prepared for increasing concern in industrial countries about the effect of carbon emissions on global climate change. As there are a variety of proposals circulating the globe, they are seeking a predictable program that will let them stay in business.

In the September/October issue of The American Conservative, R Street’s Andrew Moylan laid out the conservative case for a carbon tax. He looked at the manner in which conservatives consistently denied any problems in the health care industry, leaving the ball entirely in the Democratic court and allowing Obamacare to be passed in the first place. Moylan then laid out a plan for getting conservatives out ahead of the curve. By making the tax revenue he proposed being able to pursue other conservative policy goals, such as a more growth-friendly tax code, in exchange for addressing climate change.

13 Responses to ““A Rational Perspective”: Corporations Prepare for Carbon Limits”

  1. omnologos Says:

    Great – so we’ll see now who’s on the pay of Big Oil at last

    • To remain within 2C we need to avoid exceeding our 1000Gt carbon budget. We should be reducing emissions, instead they are increasing by 1.8% per annum. If we change nought we run out of runway by mid-century.

      I look forward to hearing your proposals as to how to avoid this.

      • I’ve got a rather simple one:  slap a tax on carbon, starting at $40/ton and escalating to no less than $100/ton, in the G7 and inside all other participating nations.  Slap a $100/ton tax on all imported goods from outside the carbon bloc.  Refund all the tax monies as deductibles on social and income taxes.  Simultaneously, eliminate all renewable portfolio standards, feed-in tariffs and other market interference.

        At $40/ton, the carbon tax on natural gas is equivalent to about 2.2¢/kWh, so wind needs no further advantages so long as it can supply power when needed.  But we’d see effects far beyond the electric grid, as heating fuel and industrial and motor fuels were affected as well.  This would hand advantages to carbon-free energy sources, no matter what they are.

        It doesn’t matter what users go to, so long as they go away from emitting carbon.  If they can make wind work for them, terrific!  If they can use the geothermal brine from an uneconomic oil well to distill ethanol, wonderful!  But by capping the cost of not switching at the carbon fee, the misery is also capped and technologies are allowed to develop at their own pace.

        Of course, I believe that one consequence would be a massive build-out of nuclear generating capacity.  I’d like to see industrial process heat go nuclear as well.  De-carbonizing the existing industrial base eliminates many of the unintended consequences (what if your carbon caps shut down part of your wind industry’s supply chain?) and the political resistance that is inevitable with such demands.  Just side-step it.  If energy is carbon free, people can use fifty times as much before affecting the climate as much as we do now.  By the time people feel like using fifty times as much energy, it’ll probably be simpler to get them to move off-planet to do it.

        • MorinMoss Says:

          Both wind & nuclear need a goodly amount of steel & concrete which is carbon-intensive.
          Nuclear may be much lower per unit energy produced but the payback clock takes a lot longer to start so I think solar PV / thermal / storage will get a huge boost as well.

          • The payback clock on either is less than a year from startup, so the different so far as the climate is concerned isn’t affected so much by delays as by how much fossil fuel can be displaced.

  2. Some form of carbon pricing will happen; it will have to if we are to avoid the heat-death of civilization. It would stabilize the market to have an international agreement on the price of carbon and they know it. I’m all for a pollution-fee and dividend (to all taxpayers) style of “tax” on carbon. This would not entail a growth of government and would give people an incentive to invest in non-carbon, non-fossil-fuel, alternatives based on a fair market. This is a hopeful development.

  3. In the September/October issue of The American Conservative, R Street’s Andrew Moylan laid out the conservative case for a carbon tax. He looked at the manner in which conservatives consistently denied any problems in the health care industry, leaving the ball entirely in the Democratic court and allowing Obamacare to be passed in the first place.

    I keep making that argument to denialists.  They never learn.

    BTW, your post ends with a sentence fragment.

  4. […] posted on how a number of large companies are beginning to face reality and prepare for a carbon constrained future, with internal carbon pricing. These include Walt Disney, Walmart, and even oil companies like Shell […]

  5. […] response, that seems to have more to do with faulty toilet training than economics.  In fact, as I’ve reported before, corporations around the world, for the most part, get it that climate change is a real problem, and […]

  6. […] me” response, that seems to have more to do with faulty toilet training than economics. In fact, as I’ve reported before, corporations around the world, for the most part, get it that climate change is a real problem, and […]

  7. […] I’ve reported this before.  Big corporations, having hired very smart people to advise them about the future – know that climate change is real and man made. Exxon CEO Rex Tillerson admits as much above, though hedging on the effects.  A number of companies therefore understand that carbon regulations are inevitable. Many of them, including Exxon, are already pricing carbon internally.  The past few month’s events just underscore the urgency. […]

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