The carbon pricing debate: Where do you stand?

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To understand more why energy groups want a carbon tax, watch the FT video:

Six top oil and gas chief executives from BP, BG Group, Shell, ENI, Total and Statoil have urged to introduce carbon pricing systems to tackle climate change.

The chief executives said, “Our industry faces a challenge: we need to meet greater energy demand with less CO2. We are ready to meet that challenge and we are prepared to play our part.”

This represents a clear commitment from Europe’s main oil and gas companies to reduce carbon emissions and take leadership for a future with less pollution.

In a joint letter to the United Nations Framework Convention on Climate Change (UNFCCC), Bob Dudley, Helge Lund, Ben van Beurden, Claudio Descalzi, Patrick Pouyanné and Eldar Sætre said that, “Carbon pricing will discourage high carbon options and reduce uncertainty that will help stimulate investments in the right low-carbon technologies and the right resources at the right pace.”

A new carbon-pricing scheme would lead to a switch from coal to gas in power generation. The use of natural gas is thought to have a crucial role to play to reduce carbon emissions while meeting growing energy demand.

However, US companies such as ExxonMobil, Chevron, and ConocoPhillips did not sign the letter. At the WGC in Paris, Total’s Pouyanné said, “I have talked with the US majors but got different answers”.

During a panel discussion ExxonMobil’s Robert Franklin was asked why Exxon did not join the European initiative, and he replied “We have had discussions with European majors, and we wish them well, but we don't believe we need to join this scheme".

ExxonMobil’s CEO, Rex Tillerson, added that CO2 emissions continue to drop in the US thanks to shale gas production and there is no need of putting a price on carbon.

At a conference in Vienna, Chevron CEO John Watson said that the proposed new carbon-pricing scheme is not the answer as the cost of energy would be too high and “customers want affordably energy”.

“I don’t think that putting a price on carbon is necessarily the answer. I’ve never had a customer come to me and ask to pay a higher price for oil, gas or other products.”

IEA’s Director Maria van der Hoeven did not agree and said a pricing system for carbon “is very welcome, and I encourage those who have not yet taken that step to follow suit. A realistic and effective carbon price is an essential component of the modern energy system.”

Shell Ben van Beurden believes governments and the UN should now introduce carbon–pricing mechanisms and an international framework to connect the national systems.

Where do you stand? Are you in favour or against global carbon taxes? Let us know your views below.

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