Business Leaders Call for Long-term, Stable Carbon Pricing Policies

Business Leaders Call for Long-term, Stable Carbon Pricing Policies

New report tackles concerns about industrial competitiveness, finds that these can be addressed through strong carbon pricing policies.

New York, September 21, 2019 – A new report today by the High-Level Commission on Carbon Pricing and Competitiveness— comprising CEOs and senior executives from leading global companies, as well as former high-level government officials and representatives from academia—calls on industry peers and governments to adopt strong carbon pricing policies. As more businesses develop low-carbon strategies, supportive government policies can act in tandem to unlock economic opportunities and manage competitiveness concerns.

“Bold and immediate commitment is needed to respond to the challenge of climate change. Carbon pricing is an effective response especially when coupled with other policies. It can result in remarkable opportunities for corporations, countries, and communities,” said Anand Mahindra, Chairman, Mahindra Group.

Joining the Commission on this call for strong carbon prices are leading companies and organizations that have endorsed the report’s key findings (see list below).

Carbon pricing is a flexible and low-cost approach to reduce greenhouse gases. Carbon pricing, along with other policies, such as increased investment in low-carbon technologies, can drive innovation in industries and foster continuous process improvement. Taken together, these policies will facilitate the transition to a low-carbon economy, even in highly emissions-intensive and trade-exposed sectors.

“Carbon pricing has proven to be one of the most effective tools to unlock the potential from the private sector to support innovation and low-carbon growth. Carbon pricing is only one of many elements determining global competitiveness and plays a smaller role than other factors, for instance, labor and infrastructure,” said Feike Sijbesma, CEO, DSM.

The report finds a wealth of experience on how other policies, such as lowering other corporate taxes and providing technology innovation assistance to emerging industries, can support carbon pricing and alleviate competitiveness concerns. It finds that other variables—such as corporate tax rates, energy prices, wage rates, labor availability, infrastructure, geographic location, cost of capital, exchange rates, commodities and materials prices—have as large an impact as carbon pricing does on most industry decisions to locate or invest. Furthermore, early evidence from advanced economies shows that putting a price on carbon pollution does not curtail industrial growth or prompt polluters to move to countries that do not charge such a price.

Additionally, carbon pricing can be advantageous for low-emitting firms and has the potential to boost new industries and advance innovation in existing ones. For example, after British Columbia introduced a carbon tax, a new clean technology sector emerged, comprising over 200 companies collectively generating $1.7b annually.

Other jurisdictions have also been successful at managing the impact of carbon prices on international competitiveness for high-emitting and trade-exposed sectors. Some examples include:

  • Sweden’s carbon tax, which is the highest in the world at kr1173/tCO2e (US$127/tCO2e) was accompanied by policies to deliver a significant reduction in the marginal tax rates on energy, capital, and labor. According to Sweden’s Ministry of Finance, during the 1990-2015 period, Sweden’s GDP increased by 75%, while GHG emissions went down 26%.

  • California successfully enacted a carbon price and other measures that addressed sector-specific competitiveness concerns, despite the fact that its electricity grid is connected to several states that do not have a carbon price. The state used border adjustment measures to address specific competitiveness, requiring electricity imported from border states to obtain emissions allowances, thus leveling the playing field.

The report has received broad support and endorsements from businesses community, including international companies with several from WEF CEO Climate Leaders Alliance and influential organizations such as WBCSD, We Mean Business, and ICC. The full list of endorsing companies is below, and additional endorsers will be added to the CPLC website.

To watch the livestream of the launch event, download the report, and see additional endorsers, visit: www.carbonpricingleadership.org/competitiveness 


The High-Level Commission on Carbon Pricing and Competitiveness:

Co-chairs

  • Mr. Anand Mahindra, Chairman, Mahindra Group

  • Mr. Feike Sijbesma, Chairman and Chief Executive Officer, Royal DSM

Commissioners

  • Mr. Hakan Hamdi Bulgurlu, Chief Executive Officer, Arçelik

  • Mr. Felipe Calderón, Former President, Mexico; President, Human Sustainable Development Foundation; Honorary Chair, Global Commission on the Economy and Climate

  • Ms. Goh Swee Chen, Former Chairman, Shell Companies in Singapore; President, Global Compact Network Singapore

  • Mr. Jos Delbeke, Former DG-Climate Action, European Commission; Professor, European University Institute, Florence, and KU Leuven, Belgium

  • Mr. Lim Ah Doo, Chairman, Olam International Ltd.

  • Ms. Anne M. Finucane, Vice Chairman, Bank of America; Chairman of the Board, Bank of America Merrill Lynch Europe

  • Mr. Jean-Sébastien Jacques, Chief Executive Officer, Rio Tinto

  • Mr. Martin Lindqvist, President and Chief Executive Officer, SSAB AB

  • Ms. Marcia Smith, Senior Vice President, Sustainability and External Affairs, Teck Resources Limited

  • Mr. Andrew Mackenzie, Chief Executive Officer and Executive Director and Chairman of the Executive Leadership Team, BHP Group Ltd.

  • Mr. Gérard Mestrallet, Honorary Chairman, Engie; Honorary Chairman, Suez

  • Mr. Bongani Nqwababa, Joint President and Chief Executive Officer, Sasol

  • Ms. Mari Elka Pangestu, Former Minister of Trade, Indonesia; Professor, University of Indonesia; Board of Trustees, Centre for Strategic and International Studies, Jakarta; Senior Fellow, Columbia University

  • Mr. Mahendra Singhi, Managing Director and Chief Executive Officer, Dalmia Cement (Bharat) Ltd.

  • Lord Nicholas Stern, IG Patel Professor of Economics and Government; Chairman of the Grantham Research Institute, and Head of the India Observatory, London School of Economics

  • Mr. Eirik Wærness, Senior Vice President and Chief Economist, Equinor

 

Endorsed by

  • Acciona

  • Arcelik

  • Bank of America

  • BCSD Portugal

  • BHP

  • Boston Consulting Group

  • Capricorn Investment Group

  • CLG Europe and the Green Growth Partnership

  • Dalmia Cement (Bharat) Ltd.

  • Danfoss

  • Électricité de France -  EDF  

  • En+ Group

  • Energias de Portugal – EDP

  • Engie

  • Equinor

  • Global Compact Network Singapore

  • Iberdrola

  • Interface Nederland BV

  • International Chamber of Commerce

  • International Finance Corporation (IFC)

  • Johnson Controls

  • Kokusai Kogyo Co., Ltd

  • Lafarge Holcim

  • LeasePlan Corporation N.V.

  • Lenzing Group

  • LGT

  • Michelin

  • MINIWIZ Pte Ltd

  • Olam International

  • Petrochemical Corporation of Singapore (Private) Limited

  • PT. Rimba Makmur Utama 

  • Quest Ventures

  • Rio Tinto

  • Royal DSM

  • Saint Gobain

  • Sasol

  • Shell

  • Signify

  • Societe General

  • SSAB AB

  • Suez

  • Suntory Holdings Limited

  • Teck Resources

  • Unilever

  • WBCSD

  • We Mean Business

The International Chamber of Commerce - as the institutional representative of 45 million companies worldwide - recognizes the urgent need to keep the global temperature increase below 1.5 degrees Celsius and work towards net-zero emissions by 2050. Climate action is everyone’s business and achieving our collective climate goals will require a mix of voluntary action and coherent policy frameworks.
This flagship report from the High-Level Commission on Carbon Pricing and Competitiveness is a critical contribution to this debate. The report presents the case for carbon pricing as one of the policy drivers to a low carbon economy and - through diligent consultations, expert inputs and academic research - shares insights on a variety of ways to address competitiveness risks.”
— John W.H. Denton AO, Secretary General of the International Chamber of Commerce
In a relatively innovative and politically challenging area like carbon pricing, policy certainty is especially important. Without this certainty, potential investors face significant risk. It is essential that before significant low-carbon capital investments are committed, a jurisdiction has truly committed to a low-carbon future as a key pillar of their economic development. And transparent policies, like a price on carbon, certainly can provide that assurance.”
— Anne Finucane, Vice Chairman, Bank of America
Carbon cost is one of many factors that influence our investment decision at the impact fund. While existing carbon pricing programs only account for a small proportion of the overall economy, research such as this Report of the High-Level Commission on Carbon Pricing and Competitiveness provides a timely reality check and guidance forward”
— Mr. James Tan 陈中 Managing Partner 管理合伙人 QUEST VENTURES 求索创投
I applaud the new Report of the CPLC High-Level Commission on Carbon Pricing and Competitiveness which comes just in time for the UN Climate Action Summit 2019.
We can’t fight climate change effectively without a clear analysis of the changes needed to achieve a net zero-carbon future.
The authors of the Report have done a great job in adding to our understanding of this complex issue and their findings will serve as important guidelines in building a truly sustainable global economy”
— Lord Barker of Battle, Executive Chairman of En+ Group plc and former UK Climate Change minister
Michelin Group has always been in favor of pricing carbon, whatever the mechanism, as long as the system is transparent, rewards best performers and ensures a level-playing field worldwide”
— Mr. Menegaux’s, Michelin’s CEO
Businesses are committing to achieving net-zero emissions by 2050, but they need strong government policies — including a meaningful price on carbon — to help them get there. Competitiveness is not a reason to shy away from setting a meaningful carbon price; it’s quite the opposite. A carbon price is an effective policy tool when you set a price, set it high, make it clear how competitiveness will be addressed and let the market get to work. This will be an important step toward driving innovation, efficiency and risk management, which will strengthen the global competitiveness of countries’ key industries to be market leaders in a zero-carbon world”
— Mr. Nigel Topping, CEO, We Mean Business
WBCSD is a long-time supporter of carbon pricing as one of the most effective and cost-efficient means of driving deep decarbonization. Carbon pricing will be critical to bring us on track to achieve net zero emissions by 2050 aligned with the 1.5°C scenarios. We welcome this report as an important tool for policymakers looking to step up decarbonization efforts, while ensuring that when there are competitiveness concerns, they are properly addressed”
— Mr. Peter Bakker, WBCSD, President and CEO
Carbon pricing is an essential tool in the climate action policy toolkit, helping secure the climate neutral future economy that we all need. Bringing insights from major global industrial companies, this report puts needed weight behind the view that carbon pricing and other climate action policies can be seen as drivers of innovation and investment, rather than as a threat to competitiveness”
— Mr. Eliot Whittington, Director, CLG Europe
EDP supports the direction of the report presenting a robust case for carbon pricing. We need to have a strong and credible carbon price signal, set at the more global level possible, that along with fossil fuel subsidy reform, will drive low carbon investments and contribute to a just transition”
— Mr. António Mexia, EDP’s CEO

Convened by the Carbon Pricing Leadership Coalition (CPLC) at its 2018 High-Level Assembly Meeting, and supported by the World Bank Group, the High-Level Commission on Carbon Pricing and Competitiveness brings together private sector leaders and senior government officials to explore the evidence base, concerns, and lessons learned from the design and implementation of carbon pricing policies vis-à-vis competitiveness.

The Carbon Pricing Leadership Coalition (CPLC) is a voluntary initiative that catalyzes action towards the successful implementation of carbon pricing around the world. The CPLC brings together leaders from government, business, civil society and academia to support carbon pricing, share experiences and enhance the global, regional, national and sub-national understanding of carbon pricing implementation.

Contacts

In Washington

Isabel Saldarriaga