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Commentary: Companies set their own carbon price to guide decisions

Author: Manjyot Bhan Ahluwalia, Center for Climate and Energy Solutions (USA), Published on: 12 September 2017

An internal carbon price is increasingly being used by companies across sectors and geographies to translate the risks and opportunities of a low-carbon economy into business decisions. Some companies set a theoretical price on carbon, or a “shadow price,” to evaluate investments, test assumptions, and guide business strategy. Some use a “carbon fee” to assign an explicit monetary value to emissions from business units to change behaviors and raise funds for clean energy and energy efficiency projects... Most companies that have adopted a shadow price use a level higher than current government carbon pricing levels ... to prepare for a transition to a low-carbon world. This is particularly true for companies in the oil and gas and metals and mining sectors... According to 2016 disclosures to the CDP [Carbon Disclosure Project], more than 1,200 companies worldwide are either pursuing internal carbon pricing or preparing to do so soon—up 23 percent from 2015. While most of these companies are based in North America and Europe, more companies in emerging economies, including Brazil, China, India, and Mexico, are exploring carbon pricing. 

(Refers to: Microsoft, BHP, Shell, Mahindra & Mahindra)

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Related companies: BHP Billiton Mahindra & Mahindra Microsoft Shell