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:
Mr. Anand Mahindra, Chairman, Mahindra Group
Mr. Feike Sijbesma, Chairman and Chief Executive Officer, Royal DSM
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
Bank of America
Boston Consulting Group
Capricorn Investment Group
CLG Europe and the Green Growth Partnership
Dalmia Cement (Bharat) Ltd.
Électricité de France - EDF
Energias de Portugal – EDP
Global Compact Network Singapore
Interface Nederland BV
International Chamber of Commerce
International Finance Corporation (IFC)
Kokusai Kogyo Co., Ltd
LeasePlan Corporation N.V.
MINIWIZ Pte Ltd
Petrochemical Corporation of Singapore (Private) Limited
PT. Rimba Makmur Utama
Suntory Holdings Limited
We Mean Business
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.