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Wednesday, December 11, 2013

A group of major U.S. companies told the British-based environmental nonprofit group CDP they expect to pay for their carbon emissions in the future, according to a report released in early December. (Getty Images)

A group of 29 major American companies – in industries ranging from energy and retail to entertainment and information technology – have decided they're not waiting on the federal government to take action on climate change. Instead, they've already begun to include the cost of carbon emissions in their future investment plans.
The news comes from an early December report by the British-based nonprofit group CDP, which collects information from more than 10,000 companies around the world on how they manage the costs of climate change, greenhouse gas emissions, and their response to climate-related regulation.
Notably, CDP's list wasn't made up only of companies like ExxonMobil, ConocoPhillips and Chevron – also included were Microsoft, Disney, Google, and Walmart Stores.
"These are some of the most profitable and valuable companies in the U.S. that are already incorporating [the cost of carbon]," Tom Carnac, CDP's president for North America, said in an interview with weather.com. "They're looking at it clearly, deciding that this is in their best business interest."
For the companies listed in the report, the carbon price estimates – which range from $6 to $80 per ton – reflect a belief that someday in the future, they'll be required to pay for their greenhouse gas emissions. "This is climate change as a line item," said Carnac.
That's the case for Louisiana-based Entergy, a utility company that serves some 2.8 million customers across the Gulf Coast. Jeff Williams, the company's director of climate consulting, said in an interview that Entergy began planning for a "carbon-constrained economy" as far back as 2001.

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"We’ve got a very strong point of view on climate change," he added. "We believe it’s real. We believe that we need to take action to address it."
Toward that end, the company has ramped up its power generation from nuclear and natural gas, allowing it to rely less on dirtier fuels like coal, Williams said. This has helped Entergy reduce its "CO2 intensity," the amount of carbon dioxide it emits per megawatt hour of power generation, by 44 percent between 2000 and 2012.
When it's deciding on which investments to make – "as a utility, we make very large investments in long-lived assets," he added – the company games out scenarios based on what it projects the price of carbon will be years and decades into the future.
“It very much is an exercise in risk management. Identifying what potential scenarios could bring, and would our investment decisions change if that happened," Williams noted. "And if it did, what are the ways we could mitigate that risk?"
For some companies, there's a business advantage to be gained in planning for future government action on climate change. When carbon pricing becomes official, the thinking goes, they'll be ready and their competitors won't.
"While this additional action on emission reductions is primarily seen as a risk, Walmart's early action on emission reductions represents a competitive advantage over other retailers that have not performed such projects," the Arkansas-based retail giant told CDP in the report.
Eighteen countries and the European Union have implemented some form of carbon tax and/or a cap-and-trade system to reduce greenhouse gas emissions. While no equivalent system exists nationwide in the U.S., some states like California have begun experimenting with carbon taxes and emissions trading in the past few years.
The relative slow pace of federal government action is striking in contrast to the measures taken by U.S. corporations – especially when the facts about climate change are still being hotly debated in Congress, as in hearings like the one scheduled for today in the House of Representatives, titled "A Factual Look at the Relationship Between Climate and Weather."
Whatever the future holds, Carnac said, much of U.S. private industry is moving forward into a future where controls are carbon are the norm.
“What to me is fascinating is, they are utilizing these prices internally to drive decision making," he added. "And they’re still able to make extremely profitable investments and return great value to shareholders."
Read the full report, Major U.S. Companies Using a Price on Carbon at CDP.