Companies accelerate use of carbon pricing

The number of companies putting a price on their carbon pollution has risen sharply in the past 12 months as governments prepare to agree on tougher action to combat climate change this year.

The carmaker General Motors, and Glencore, the airline, are among 437 companies reporting the use of carbon pricing measures to CDP, an environmental data group, triple the number from last year.

The expectation that governments will strike a global accord limiting carbon dioxide pollution at a UN summit in Paris this December is one reason for the rise, said CDP adviser Paula DiPerna.

“There is a growing awareness that there will be mandatory carbon limits, if not in Paris this year then soon,” she said.

Several big oil and gas companies have long used an internal carbon price — ranging from $40 to $80 a tonne — to help assess the value of investments that could be affected by carbon taxes or other measures forcing businesses to pay for emissions of CO2.

Now a new report from CDP, which has been monitoring company carbon pricing since 2011, reveals businesses in a range of other industries have adopted the strategy.

The prices companies are voluntarily assigning to a tonne of emitted carbon vary widely, according to the CDP report, and are generally used as a financial planning tool rather than representing an actual cost for the business.

Many companies use a much higher price than the one they currently have to pay in places with a government-mandated carbon pricing scheme, such as the EU’s emissions trading system, the world’s largest carbon market.

Spain’s Inditex fashion group, owner of the Zara brand, says it has a $30-a-tonne internal carbon price, even though prevailing EU benchmark carbon prices are a little more than €8 a tonne, or $9.

WPP, the advertising group, said it used an internal price of £29 a tonne of CO2 when buying or refitting buildings to understand “the impact of future energy and carbon regulations on our business”.

Stanley black and Decker, the US tool maker, uses different prices in different countries, from $25 per tonne in France to $150 in Sweden, and other figures in various US states and Canada, based on actual or pending climate legislation.

The CDP found the biggest surge in the number of companies reporting carbon price use over the past year was in Asia, where China is expected to launch a national carbon market within four years and South Korea has just introduced one.

Australia last year repealed a carbon tax, bucking what the World Bank says is a global trend towards more pricing of greenhouse gas pollution.

About 40 countries and more than 20 cities, states, and regions are putting a price on carbon according to a new World Bank report, representing almost a quarter of global greenhouse gas emissions.

The number of carbon pricing systems in operation or pending has nearly doubled in the past three years, from 20 to 38, says the World Bank, confirming the CDP report’s findings that companies are increasingly using internal carbon pricing as government-mandated schemes spread.