What is a carbon price?
According to think tank Resources for the Future, a carbon price is a climate policy approach that works by charging emitters for the tons of carbon dioxide for which they are responsible. A number of countries and sub-national jurisdictions, like US regions or states, use this policy to reduce emissions.
Cap-and-invest and a carbon tax are examples of carbon pricing. S&P Global describes trading in the carbon pricing marketplace as “an increasingly popular mechanism to harness market forces to address climate change by creating financial incentives for companies and countries to lower their emissions.”
Carbon pricing benefits
Carbon pricing promotes emissions accountability and helps companies develop effective climate strategies together with regulatory agencies.
bp supports a price on carbon because it's fair, efficient and effective. A well-designed carbon price provides the right incentives to decarbonize the entire economy. It encourages companies like bp to innovate more and emit less. The greater the program’s scope, the more effective it can be.
While we’re supportive of a national carbon pricing program, much of the action is taking place at the state and regional level, and we’re engaging with state stakeholders to progress well-designed carbon pricing programs there.
Cap-and-invest in Washington state
Home to our Cherry Point Refinery, Washington is now the second state in the country with a comprehensive, economy-wide, market-based carbon pricing program – the Climate Commitment Act. The legislature and governor brought this progressive climate policy to the Evergreen State to lower carbon emissions.
The package of solutions will help to produce fewer emissions, making the entire economy cleaner by:
Incentivizing and rewarding innovation to reduce carbon emissions.
Creating policy certainty that sends clear signals to emitters.
Setting a new standard for the country and creating the opportunity to link Washington’s market to cap-and-trade markets in California and Quebec.
Strengthening the state’s economy by generating revenue that can reach the entire state.
Making climate goals achievable. Like bp, Washington has set an ambition to be net zero by 2050 and a cap on emissions is the most effective and efficient way to get there.
We worked with Clean & Prosperous Washington to advance the Climate Commitment Act, a broad coalition of businesses and environmental, labor, social justice and equity advocates. Learn more about the coalition’s work.
bp will keep doing our part to bring Washington state closer to net zero, starting with our own operations. And we look forward to working with Washington state agencies as they look to implement the Climate Commitment Act.
Cherry Point is already making progress under the new policy. We’re investing $269 million to improve the refinery’s efficiency, reduce its carbon dioxide (CO₂) emissions and increase its renewable diesel production capability. Expected to create more than 300 local jobs over the next three years, this investment is aligned with our aims to be net zero across our operations, and to reduce the lifecycle carbon intensity of the products we sell by 15-20%, by 2030. Good policy like the Climate Commitment Act incentivizes companies like bp to accelerate modernization and lower-carbon solutions.
Read more about our Cherry Point investment in the Seattle Times.
Regional Greenhouse Gas Initiative
The Regional Greenhouse Gas Initiative (RGGI) is a successful cap-and-trade carbon pricing program for the power sector. Throughout the last decade, participating states have seen a range of benefits – including emission reductions – while electricity costs have decreased, according to the Center for Climate and Energy Solutions.
Independent studies of the program show RGGI works for people, businesses and the planet. RGGI states also outpaced power sector emissions reductions over the rest of the country by 90 percent. bp publicly advocated for Virginia to join RGGI, which it did in 2020.
Our advocacy in action
BP America Inc., comments on New York Cap and Invest Pre-Proposal Draft
bp America comments on potential changes to California’s low carbon fuel standard (LCFS)
bp America comments on Proposed Chapter 173-446 WAC, Climate Commitment Act Program Rule
bp America comments to Washington State Department of Ecology on Clean Fuels Program
bp America comments to Washington State Department of Ecology on Clean Fuels Program
bp America comments on Oregon Clean Fuels Program Expansion workshop
bp America comments on Draft Chapter 173-446 WAC, Climate Commitment Act Program Rule
bp America comments following California Air Resources Board Low Carbon Fuel Standard workshop
bp America comments following California Air Resources Board 2022 Scoping Plan Technical Workshop
bp America comments following California Air Resources Board 2022 Scoping Plan Workshop
Washington state provides a blueprint for others to follow – Mary Streett on LinkedIn
Testimony on SB 5126 – Washington Senate Ways & Means Committee
Testimony on HB1091 – Washington House Environment and Energy Committee
Testimony on SB 5126 – Washington Senate Environment, Energy and Technology Committee
