First came the news that a majority of the American public and many big investors are increasingly open to curbing the effect of global warming and supportive of mitigating carbon emissions by government action. Now comes a new report from the CDP revealing that many of the largest U.S. and global companies are ready for it, too.
The CDP, which released its report last week, analyzed data from many of the biggest companies headquartered in the U.S. or doing business here. They included oil giants like ExxonMobil, Chevron, BP, and Shell, and industrial behemoths like GE, DuPont, and Duke Energy, just to name a few. The CDP found that many are planning their fiscal futures around a price on carbon. A price on carbon—whether through a simple tax or a market-based cap and trade type system—is the most likely mechanism regulators would use to reign in greenhouse gas (“GHG”) emissions and, ultimately, climate change.
This is a big deal both politically and from a business standpoint. The CDP (formerly the Carbon Disclosure Project) is an international, not-for-profit organization that provides the only global system for companies and cities to measure, disclose, manage, and share vital environmental information. The CDP works with institutional investors with assets of $87 trillion. The study is based on the CDP’s annual voluntary disclosure process. The conclusion: a broad, diverse group of American and global companies have accepted a price for carbon and incorporated it into their normal business planning.
The CDP says companies fully expect an eventual regulatory approach in some form that addresses climate change. Accordingly, companies are using a price for carbon to plan for identifying revenue opportunities, risks, and to incentivize the achievement of maximum energy efficiencies to reduce costs and guide capital investment decision.
What happened to the claim that business opposes a price on carbon or a carbon tax? While some politicians call any effort to control carbon a “job killer,” lots of big companies are apparently saying “get over it.” The New York Times published an article on December 5 analyzing some of the political ramifications. Its take was that coalitions are shifting, and that business leaders, even those who count themselves as conservative Republicans, have sensed the direction of climate change policy in America and have decided to prepare to profit from it. They’re voting with their business plans.
The kicker is that no company thought that any business disruption would result from achieving GHG reductions or from carbon regulatory regimes. That may come as an inconvenient truth—so to speak—to politicians and pundits who’ve labeled efforts to control carbon job killers. It’s becoming increasingly clear that big business is not afraid of a regulatory regime for carbon. In fact, most companies are planning for it and even see opportunities for growth.
This also may have very significant legal ramifications because the politics are shifting at an interesting time—the Environmental Protection Agency (“EPA”) is about to promulgate its new rules for requiring states to apply the “best system of emissions reduction” for existing power plants. Just a short time ago, the nine densely populated Northeast and Mid-Atlantic states that make up the Regional Greenhouse Gas Initiative (“RGGI”) submitted comments to the EPA regarding those upcoming rules. RGGI is a proven and effective system of carbon emissions control that raises revenue for participating states to boot through its auctions. The gist of what the RGGI states said is that membership and participation in the RGGI would satisfy the “best system of emissions reduction.”