Climate Watch: Many businesses now clamoring for a fee on carbon
“Years from now, we’ll look back on May 2019 as a breakthrough moment, when business engagement in climate policy gathered strength and became an unstoppable movement.”
So said Victoria Mills, managing director of the Environmental Defense Fund, in an article she wrote for Greenbiz.
What happened in May was that many companies publicly committed to the stance that Citizens’ Climate Lobby has championed since its founding 12 years ago: a price on carbon. And they promised to lobby Congress for it.
Who for instance? Shell, BP, ExxonMobil, ConocoPhillips, Microsoft, Tesla, Ford Motor Company, Dupont, Unilever, BASF, Citi, Dow, Exelon, Dominion Energy, PG&E, DTE Energy and LafargeHolcim.
Many of these firms have joined a new initiative called the CEO Climate Dialogue urging the president and Congress to develop long-term federal policy to reduce greenhouse gas emissions by 80 percent or more by 2050.
Why are businesses coming around to the idea of putting a fee on carbon? One reason is that the absence of unified federal policy on climate change yields a patchwork of state and local regulations making business planning far more difficult. Corporations prefer a national law because it will make their own preparation considerably easier.
Another factor is that insurance companies are sounding the alarm on climate change. Moody’s Analytics says unchecked climate change could cost the U.S. between $54 trillion and $69 trillion by 2100. In April, State College-based Accuweather estimated the total flood damage to the Midwest just this year to be $12.5 billion. Numbers like these make insurance firms wary of covering companies contributing to climate change.
A third influence is shareholder and employee pressure. The Wall Street Journal reported that the number of shareholder proposals about climate change was up significantly at annual meetings this year.
At BP’s meeting in April, investors holding billions of shares pushed the firm to adopt a climate resolution similar to the Paris Climate Agreement. It passed overwhelmingly. At Amazon’s shareholder meeting, a proposal backed by 7,600 employees called on the firm to write a public report about preparations for climate-related disruptions and plans to reduce dependence on fossil fuels. Though the proposal failed to pass, two months later Amazon announced a plan to eliminate carbon output from half of its customer deliveries by 2030. Just this month, more than 1,000 Google employees published an open letter calling on the company to develop a stronger plan to address climate change.
An aim of the CEO Climate Dialogue is to find a market-based way to reduce greenhouse gasses without harming the economy. The concept of “carbon fee and dividend” is designed to do that and has been endorsed by 3,554 U.S. economists including 27 Nobel Laureates and four former chairs of the Federal Reserve.
A version of carbon fee and dividend that consistently tests well in policy models is a bipartisan bill in the U.S. House called “The Energy Innovation and Carbon Dividend Act.” It has 68 co-sponsors. Check it out.
One of the arguments against doing anything about climate change has always been that it would hurt business. Now many of the world’s most powerful firms are ditching that narrative and actually calling for action on climate change.
Momentum is building. Business people now realize that doing nothing about this problem is the thing that will be really bad for business.
