This week, I joined Frans Timmermans – architect of the EU’s Green Deal and European Commission Executive Vice-President – along with other business leaders, for a televised debate to advocate for carbon pricing. You can watch my remarks here, but I wanted to also take a moment to explain why at bp we believe carbon pricing to be so important.
We do a lot more than just support carbon pricing. We actively advocate for it, have done so for many years, and last year, made advocating for policies that support net zero, including carbon pricing, one of our 10 company aims.
So here are my five reasons why bp supports well-designed carbon pricing.
We know that the world is on an unsustainable path, with carbon emissions continuing to increase. And it’s having an impact: NASA scientists recently announced that 2020 was the warmest year on record. But carbon emissions continue to rise, contributing to increasing atmospheric concentrations of greenhouse gases. Carbon pricing is one of our most powerful tools for reducing those emissions.
At its most simple, carbon pricing is the idea that those who emit carbon should pay a price for that carbon – either pay a tax or buy a permit – and those who emit the most should pay the most. If governments choose to, they can use the proceeds of carbon pricing to support a just energy transition.
It targets the root of the problem – carbon emissions – and harnesses the power of the market to create change. It gives companies financial incentives to invest in the energy transition – allocating capital, driving innovation, and scaling technology. And it encourages their customers to make lower carbon choices.
Emissions from installations covered by the EU’s emissions trading scheme fell by 35% between 2005 and 2019, while the economy grew. Carbon pricing isn’t the only tool we need, but groups as diverse as The Nature Conservancy, the World Bank and the Environmental Defence Fund agree: carbon pricing works.
The World Bank’s Carbon Pricing Dashboard shows that there are currently 64 carbon pricing systems around the world, covering 22.3% of global emissions. If we connect these pricing systems, as the EU and Switzerland have done with theirs, we can widen the pool of participants, reduce costs, and create a global response to a global challenge.
Of course, carbon pricing alone won’t take us to net zero. We need other measures too – including investment in the new technologies that make reducing oil and gas usage possible.
That’s why, under bp’s net zero ambition and strategy, we are aiming for a 10-fold increase in our annual low carbon investment within 10 years. By 2030, bp aims to have developed around 50GW of net renewable generating capacity – a 20-fold increase from 2019.
Meanwhile, we will continue to advocate for carbon pricing – not only to help bp get to net zero, but to help the world get there too.