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More than 2,000 companies, worth more than $ 27 million in market capitalization, already have or plan to set an internal carbon price within two years, according to global environmental impact outreach group CDP.
Internal carbon prices (a cost per metric ton of carbon dioxide equivalent) can be included in capital expenditures or in organizations ’research and development costs as part of decision-making.
Prices can be hypothetical when no money is spent, but the company calculates an additional cost based on the carbon intensity of the investment, with the goal of incentivizing spending with low carbon emissions. Some companies, including Microsoft, require departments to “pay” an internal fee based on the emissions they generate.
“What you’re trying to do is provoke a different investment decision,” said Nicolette Bartlett, CDP’s global director of climate change. Depending on the price, what it covers and the importance that a company attaches to the calculation, it can be very or not at all influential.
Rates are likely to be “more influential,” as they represent an internal “tax,” he added.
The CDP said the number of companies that included the cost of carbon in their business plans or planned to do so in two years had increased by 80% in five years. They included vehicle manufacturer Volvo, large oil company Shell and retailer Next, and 226 of the top 500 companies by market value in the global index of all FTSE layers.
The domestic price of domestic carbon reported to the CDP by companies in 2020 was $ 25 per metric ton of CO2 equivalent. This is considerably lower than the current price of allowances traded under the EU emissions trading scheme, which this year reached an all-time high of more than $ 40.
But Bartlett said the focus was too much on price rather than “the influence it has on decision making.”
“The strategy companies have around them is more important than the number they use.” A high carbon price was not guaranteed to affect the change, he added.
The CDP found that companies that predicted a carbon regulatory price would have set a price. But many companies likely to be affected by the regulation were not yet setting prices for the carbon problem.
In particular, some EU companies “are potentially underestimating the rate of change this system is experiencing,” Bartlett said.
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