Europe’s six largest energy companies have urged governments to tax carbon emissions ahead of UN climate talks for later this year.
In a letter published in the Financial Times on Monday the chief executives of Shell, BP, BG Group, Eni, Statoil and Total called for “widespread and effective” carbon pricing to be part of a climate deal that may be negotiated in Paris.
The joint statement marks a rare moment for an industry that’s often seen as in denial about climate change - but also an awareness that government regulation to change energy pricing could lead to new and profitable opportunities.
“We owe it to future generations to seek realistic, workable solutions to the challenge of providing more energy while tackling climate change,” the letter says. “We urge governments to create the incentives that will encourage all potential contributors to a more sustainable future.”
US oil giants ExxonMobil and Chevron chose not to take part in the initiative, an industry source told Reuters.
While acknowledging that renewable energy has “an increasing role to play,” the executives emphasized that efforts to lower carbon emissions shouldn't get in the way of economic growth and a "a growing population seeking better living standards.” They argued that switching from coal to natural gas, a major revenue stream for all six companies, would help accomplish that.
The letter – in addition to a more detailed one sent to the UN’s top climate official – received praise from environmental groups.
"This is a symbolic moment, and demonstrates an important if not universal shift,” Mark Kenber, the executive director of The Climate Group, said in a statement. "It reflects a growing realization within influential sectors of the fossil fuel industry of a need to adapt to both market and climate realities.”
About 40 countries use or say they are planning to use a tax on carbon to bring down greenhouse gas emissions, according to a report released last month by the World Bank. The country's generate about 12 percent of annual global emissions.
“An effective carbon price is an essential, if insufficient, part of a policy package that can lower emissions and drive the economy toward a low-carbon, resilient future,” Rachel Kyte, the World Bank’s special envoy for climate change, said in a statement.
Carbon pricing works by charging companies a set fee for each ton of carbon they emit. The more carbon an energy source emits, the more expensive it will be. In the world's current energy mix coal is the dirtiest, oil is the middle, and natural gas is the cleanest.
In their letter, the executive asked governments to provide a clear, stable, and long-term policy framework for carbon taxing.
So far, 38 of 196 UN member states have submitted plans outlining their actions to reduce emissions beyond 2020. The plans are meant to be the building blocks for the international climate accord that is the aspiration of the Paris conference.