What do oil companies know about climate change that politicians don’t?

Climate change can make storms like Typhoon Haiyan more frequent, and someone’s got to pay the bill.
Climate change can make storms like Typhoon Haiyan more frequent, and someone’s got to pay the bill.
Image: Reuters/Athit Perawongmetha
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The world’s largest oil companies are preparing for a future in which putting a price on carbon fights climate change. US politicians say it won’t happen. People who believe in the wisdom of the markets might consider siding with the people answering to shareholders rather than primary voters.

A new report (pdf) by CDP, an environmental data company, reveals that twenty-nine major companies including oil giants ExxonMobil, ConocoPhillips, Chevron, Shell and BP, are incorporating a price on carbon emissions in their long-term financial planning. The cost, ranging from $6 to $60 per metric ton, could affect how much companies pay for energy, invest in efficiency and charge their customers. While some of these companies have spent millions lobbying against just public policy that would put a carbon price in place, climate change Cassandras see the inclusion of such figures in their financial planning as a sign that their positions are evolving—and that change could be on the way.

The European Union, where many of the companies do business, has already put in place a program that caps greenhouse emissions from power plants, factories and airliners, allowing them to buy and trade emission allowances as needed. But ideas like that have become a political non-starter in the US after several prominent failures, most recently in 2009. The Obama administration is currently planning new regulations for coal plants, perhaps the most it can do to limit carbon emissions without congressional support, but Republicans in the US House of Representatives are fighting even those measures.

On the other hand, the US has made international commitments to reduce its emissions 80% below 2005 levels by 2050. Evidence of climate change is piling up, and scientists warn that scary examples like Typhoon Haiyan, the strongest storm to ever make landfall, could become more frequent. The people running multi-billion dollar organizations have decided that’s too much risk to ignore.