Carbon pricing saves major companies money and emissions

Not-for-profit climate change disclosure CDP released a new report on carbon pricing alongside New York Climate Week.

According to the report, 1,200 companies – 23 per cent more than last year – have disclosed to CDP that they either plan to or currently place an internal price on carbon.

140 companies are even including carbon pricing in their business strategies and operations.

A growing number of multi-national companies are using internal carbon pricing to invest in low-carbon technologies, as well as product offerings and to save money.

Carbon pricing varies from one dollar to more than $800, according to the new report.

Suez – global environmental services company – uses an internal carbon price to focus on investment in low-carbon technologies such as energy-efficient water pumps.

IT giant Microsoft also implemented the carbon pricing principle which helps support low-carbon projects such as internal efficiency upgrades, power purchase agreements and green power instruments, carbon offset projects and supply chain engagement, saving the company more than $10 million every year.

Automaker Nissan disclosed to CDP’s climate questionnaire: “GHG emissions reduction is one of the most crucial parameters in Nissan’s investment plan selection process. Proposals are compared and selected based on carbon emissions reduction per unit cost of investment, as well as the energy reduction potential, measured with an internal price of carbon.”

CDP special advisor, Paula DiPerna, said: “Internal carbon pricing is a way of seeing things that are otherwise hidden in business terms of dollars and sense... High carbon is a very dark cave and the business benefit of using a carbon price is you have an illumination of the future, you illuminate the high cost of high carbon and the hidden benefits of low carbon.”

She added: “Every kind of emission, regardless of the source, is carrying a hidden cost that can be in terms of risk, mitigation, higher insurance premiums, whatever. So if you can eliminate that cost, you have a significant business benefit.”

DiPerna also said: “Companies that are global in nature, if they’re not applying a carbon price it means they are not cognizant of emerging regulations and existing regulations in the rest of the world and they are also not taking the Paris climate agreement seriously... If you haven’t set a carbon price you have to assume that your business model bay not be fit for a climate-constrained world. Your business horizon is too short and your vision is probably too narrow. Companies that ignore carbon pricing do so at their own peril.”