BP Chief Executive: Put a Price on Carbon

“We need the world to put a price on carbon.” -Tony Hayward, BP Chief Executive

In order to ensure clean energy supplies and encourage diversity in our global energy systems, the world needs to establish a price for carbon emissions, Hayward said in remarks at the World Economic Forum in Davos.

I’m not sure how to qualify that statement, coming as it is from the head of a major petroleum dependent corporation, but I definitely agree that we need to come together to figure out a global strategy for reducing greenhouse gas emissions. That solution (carbon pricing) may help, but I don’t see how it will realistically reduce CO2 emissions right now.

The system of carbon pricing would penalize every ton of greenhouse gas emissions, either through a carbon tax or by using a carbon market which would allocate a fixed number of emissions permits that must be redeemed by countries or companies for every ton of emissions.

The strategy with a carbon pricing market is to encourage favorable competitiveness for clean energy as compared to fossil fuels that emit large amounts of greenhouse gases, and many businesses prefer a carbon market based system instead of taxing CO2 emissions.

A recent European Union plan has been to hand out emissions permits for free instead of forcing businesses to pay for them, and critics are speaking out about the inequity that many see as benefiting polluters instead of encouraging the opposite effect of holding them financially responsible for their carbon emissions.

Due to decreased industrial output, a surplus of free carbon emissions permits has flooded the European carbon market in the past two months, which benefits those companies that need additional CO2 permits, yet does nothing to reduce the amount of greenhouse gas emissions in general.

Related article: Industry accused of abusing EU’s carbon trading scheme (guardian.co.uk)

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