By Dr Anthony Horton
On June 1, the heads of BP, Shell, BG Group, Statoil, Eni and Total wrote a joint letter to UN Climate Chief Christina Figueres. Aware of the critical challenge that climate change presents for the world, they wanted her to know that they are ready to play their part. In their letter they emphasised the importance of a global carbon price and their willingness to collaborate with the UN to facilitate such a price, adding that Government action discourages high carbon options and encourages the most efficient emission reductions.
In contrast to many fossil fuel companies that have slowed UN talks or funded efforts to discredit climate science, these six companies that are Europe’s top hydrocarbon explorers are insisting that they want a place at the global climate pact discussion. The signs of companies wanting to work with the UN rather than against them have been on the cards for almost 12 months. Ban Ki Moon’s climate summit in New York in September last year was seen as the turning point in changing leaders’ minds with respect to getting a price on carbon and ensuring that price was right, according to Dirk Forrister, Head of the International Emissions Trading Association (IETA).
Nigel Topping from We Mean Business is in agreement with these companies’ approach-stating that the momentum has increased and fossil fuel companies inevitably had to follow it. Rather than being against market instruments, the questions that business people need to ask are what price, where and when, he said.
The G20 is currently investigating the financial risks of high carbon investments, and the IMF has estimated that fossil fuel subsidies will hit $5.4 trillion this year. Governments are becoming increasingly worried that the $6 trillion in coal, oil and gas invested by pension plans in the last decade could spell major trouble for these funds, including significant debt and black holes. Divestment campaigns are also gathering significant momentum-starting with top Universities and now including French Insurance Group Axa (€500 million in coal assets) and Norway’s $900 billion sovereign wealth fund.
More than 190 Governments are meeting over the next two weeks in Bonn (Germany) to devise a framework for the global climate deal to be finalised in Paris in December. Most of the world leaders are committed to getting something inked however the details are far from finalised. Shell Climate Advisor David Hone has been collaborating with colleagues at IETA on a carbon pricing plan, and he notes that there has been huge increase in interest from a number of businesses in the last 10 months. He is also looking for a statement in Paris regarding the role of global carbon market, and envisages a network of markets based on “plug and play” similar to the growth of the internet and as a result of which schemes could link together.
UN Climate Chief Figueres has made very public statements regarding her wish for oil and gas leaders to join her at the table rather than play villain. Last week she called for campaigners to cease pointing the finger at fossil fuel companies. While some companies are still resisting, many others see the writing on the wall according to Baker McKenzie’s Martijn Wilder. He also says the big questions for these companies are around what they are going to be in 50 years time, will they be diversified and will they still exist? He is also adamant that they need to start asking themselves these questions now.
Anthony Horton also blogs on his own site: http://www.theclimatechangeguy.com.au