Sustainable Prosperity finds that oil and energy companies are already building a price on carbon into their estimates.
The 10 companies surveyed in the report including BP, Shell, Suncor, Statoil, Devon, Cenovus, Penn West, Enbridge, Ontario Power Generation and SaskPower are using shadow carbon prices of between C$15-68/tonne carbon dioxide equivalent (Co2e), reflecting a range of expectations about the actual short and long-term carbon price. The top of the range represents a price projection for future years: C$48 – $68/tonne for 2020 and up to 2040.
A shadow carbon price is the hypothetical price of carbon used voluntarily by a company, reflecting the company’s expectations of the future market carbon price or regulatory cost, or the cost of reducing or offsetting carbon emissions. The company’s choice of shadow carbon price reflects the actual regulatory price (such as Alberta’s C$15/tonne contribution to the province’s Climate Change Emissions Management Corporation) and the expected future increase in that price, among other factors. “Current carbon pricing systems in Canada provide varying levels of policy certainty for companies. That is why more and more companies are using a shadow carbon price: to ensure they are prepared for the future when carbon emissions are likely to be priced.” said Mike Wilson, Sustainable Prosperity’s Executive Director.
Note here that a price on carbon includes the possibility of costs related to either market-based solutions (cap-and-trade, carbon tax) or regulation.
Of course, the Harper government also uses a price on carbon in its estimates.