Shell Puts an Internal Price on Carbon Pollution

There is a section within Royal Dutch Shell’s 2012 sustainability report, released last spring, which describes the oil company’s self-imposed carbon pollution price. Yes, you read those last three words correctly and they are not a typo. Although Shell is a public advocate for a “strong and stable price on carbon emissions,” the company is “not waiting for government policy to develop” carbon pollution prices, as it states in the report.

Back in 2009, critics charged that Shell, along with other oil companies, supported climate change denial. Fast forward to present day and that same company states in its report that it considers “the potential cost of a project’s carbon emissions” which it sets at $40 a ton.

Think Progress reports that if Shell’s carbon pollution price were an actual national carbon tax, $0.35 a gallon would be added to the price at the pump. It would also add $0.04 a kilowatt hour (kWh) to coal power’s price, and “might cut U.S. carbon emissions more than 20 percent below current levels, which are already more than 10 percent below 2005 levels.”

There is no time to waste in reducing the world’s carbon emissions. As Shell states in its report, the world “risks setting itself on a course to potentially catastrophic climate change” without developing measures to promote investment in “more efficient and low-carbon technologies.” A report released in September from Imperial College London found that if historic energy usage trends continue, global carbon emissions will likely increase to about 50 giga tons per year by 2050, and global fossil fuel use will increase by 50 percent compared to current levels. However, the report also found that it is possible, technically, to reduce carbon emissions to the required 15 giga tons per year if all countries transition to low-carbon societies. Doing so will cost one percent of global GDP per year, which is approximately $2 trillion, by 2050.

Shell is not the only company that is setting an internal price on carbon. The Guardian recently reported  that Disney and Microsoft also have internal carbon taxes, and both companies, like Shell, “support U.S. and global policy to regulate global warming pollutants.” Disney’s carbon tax is “between $10 and $20 a ton” and that tax “has raised about $35 million so far.” Microsoft’s carbon tax is $6 to $7 a ton.

Although Shell continues to invest in extracting oil from the tar sands in Alberta, Canada, which are very carbon intensive, eventually such investments will not pay off for the global oil giant. And, eventually a carbon price will be set in the U.S. if the historic action plan signed by West Coast leaders is any indication. The governors of western states (California, Oregon and Washington) and the premier of British Columbia gathered last month to sign the Pacific Coast Action Plan on Climate and Energy. Part of the plan is creating carbon pricing programs.

Photo: Municipal Archives of Trondheim