BP: Put A Price on Carbon, Let The Market Cut Emissions

One of the world’s six major oil and gas companies supports a global price on carbon – and no, this is not an early April Fool’s joke.

In the latest version of its annual Energy Outlook report, BP recommends that governments set a meaningful global price on carbon emissions to level the playing field for businesses and let the market choose the best climate solutions.

The report, which analyzes long-term energy trends and makes projections for global energy markets over the next two decades, predicts global carbon emissions will jump 25 percent by 2035, climbing by 1 percent a year. This estimate is a cause for concern, putting greenhouse gases on a trajectory that is significantly – 18 billion tons of carbon, to be exact – above the path scientists advise to limit the global temperature increase to no more than 2 degrees Celsius above pre-industrial levels, the study notes.

BP says there is “no silver bullet” to slashing carbon emissions; rather, the company recommends that the public and private sectors pursue multiple initiatives and policies. But the bottom line: Government agencies should adopt a global price on carbon, though BP does not say whether it prefers this to take the form of a carbon tax or cap-and-trade system.

“The most likely path for carbon emissions, despite current government policies and intentions, does not appear sustainable,” says BP CEO Bob Dudley in an introductory letter to the 2015 Energy Outlook report. “…No single change or policy is likely to be sufficient on its own. And identifying in advance which changes are likely to be most effective is fraught with difficulty. This underpins the importance of policymakers taking steps that lead to a global price for carbon, which provides the right incentives for everyone to play their part.”

Global demand for energy will rise by 37 percent from 2013 to 2035 – an average of 1.4 percent per year – the report also predicts, mainly due to population growth and an increase in individuals’ income.

BP evaluates a host of potential carbon mitigation options in its report – from replacing coal with gas power to improving vehicle efficiency – and concludes that increasing energy efficiency across the economy will result in far greater emissions reductions than changing the fuel mix to cleaner-burning sources. The company’s line of business may bias them towards that deduction, but, as the oil giant itself says in the report, why not put a price on carbon and let each company identify the most efficient, cost-effective way to reduce the greatest amount of greenhouse gases?

While there is a growing number of companies and investors that support carbon pricing, it’s big news when an oil and gas company joins their ranks. ExxonMobile publicly backed a carbon tax in 2009, Grist reported, but went on to lobby against actual cap-and-trade legislation in Congress. And the Carbon Disclosure Project found that even when oil companies didn’t necessarily endorse a carbon tax, many were using carbon pricing estimates to plan for hypothetical future regulation in the U.S. – including Exxon, BP, ConocoPhillips, Chevron and Shell.

BP’s support of carbon pricing is promising – even if it just represents an oil giant caving in and accepting its regulatory future (well, we hope carbon pricing is in our regulatory future). But the question remains: If a cap-and-trade bill makes its way to Washington again, will the company that told us the effects of its 2010 Deepwater Horizon oil spill weren’t so bad advocate for a carbon pricing policy, or will it secretly work to undermine it?

Image credit: Flickr/Mike Mozart

Passionate about both writing and sustainability, Alexis Petru is freelance journalist and communications consultant based in the San Francisco Bay Area whose work has appeared on Earth911, Huffington Post and Patch.com. Prior to working as a writer, she coordinated environmental programs for Bay Area cities and counties. Connect with Alexis on Twitter at @alexispetru