climate change

Sustainability, reducing greenhouse gas emissions, and the energy transition have been hot button issues for the oil and gas industry as the sector looks to build back from the COVID-19 pandemic. Policy makers around the world have been examining methods to encourage companies to reduce carbon emissions. Among these, instituting carbon pricing, a term referring to a policy that would put a dollar cost on emissions that emitters would have to pay, has emerged as a popular topic of discussion. A new report from multinational professional services firm Pricewaterhouse Coopers (PwC) has found that an international carbon price floor (ICPF) for carbon dioxide and other greenhouse gas emissions could reduce global greenhouse gas emissions by 12.3 percent. Encouragingly, the firm found that the cost of implementing the policy would be equal to less than one percent of GDP, and, more importantly, that this cost would effectively pay for itself by avoiding economic losses associated with global warming. “We found that introducing an ICPF could be done without severe economic damage to livelihoods and business, although the effects would be somewhat uneven across the world. The costs to society and business of failing to act are far greater,” says Robert Moritz, global chairman of the PwC network. PwC analysed a proposal from the International Monetary Fund announced in June to set an ICPF of greenhouse gas emissions that by 2030 would reach $75 per tonne for high-income countries, $50 per tonne for middle-income countries, and $25 per tonne for low-income countries. Importantly, this policy is designed to encourage greenhouse gas emissions to be lowered everywhere, rather than emitters simply moving operations to countries were the cost of greenhouse gas emissions would are lower. Today, carbon is priced anywhere between $0 and $130 per tonne of CO2 equivalent in different territories around the world. As such, countries have been reluctant to place onerous costs on the production of carbon due to the risk of decreasing their international competitiveness. By implementing a global policy, this problem is greatly reduced – along with reducing the possibility businesses shifting carbon production from one area to another in a bid to avoid additional costs, a dynamic referred to as carbon leakage. PwC’s scenario found that an ICPF would not lead to major carbon leakage, but also found that its impact would be uneven across territories and sectors, with lower-income countries that rely heavily on coal for energy being harder hit, for example. As such, PwC noted that examining the use of the revenue gained from carbon pricing would be key to understanding the efficacy of the policy. “The political and technical challenges remain very significant, but we hope the research will encourage countries to consider pricing carbon in such a way that it scales up effort to reach net zero in time to limit the worst effects of climate change on people and our planet,” Moritz says. Revenues that would be raised from a carbon pricing policy would be significant, which could then be used to help ease the transition. In some regions, PwC found that revenues from an ICPF could be as high as three percent of GDP. In the firm’s scenario, these funds are collected and then redistributed to all regions where the revenues were collected, creating, in effect, a carbon dividend which would help households that have been hit by the additional costs caused by the introduction of the ICPF. Additionally, these revenues could be used to supplement innovation research, create jobs, or lower taxes. PwC estimates that for low-income economies, only 13 percent of revenues raised by the ICPF in high-income economies would be needed to compensate for GDP losses caused by the policy. In particular, the firm points to the South African Customs Union and China as regions which would be most heavily impacted by the ICPF. In these regions, PwC believes carbon pricing revenues could reach 2.8 percent and 1.7 percent of GDP, respectively. “The results of analysis of the ICPF are extremely positive. Public-private cooperation will be key for next steps and to accelerate efforts for a more sustainable and inclusive recovery,” Børge Brende, President at the World Economic Forum says. The firm also analysed the differences between the application of an ICPF if it were limited only to high-income countries versus middle-income countries as well. PwC found that if only high-income countries were included, the global emission drop would reach just 1.9 percent, compared to estimated 2030 figures without an ICPF. However, if middle-income countries, particularly China, are included then the drop in emissions would jump to eight percent. For the 12.3 percent figure to be hit, an ICPF would need to be applied to all countries globally. If the ICPF were implemented globally, and when combined with countries’ existing pledges for emission reductions, global warming could be limited to 2C, the firm said. While this figure is still significantly higher than the 1.5C limit that scientists have previously pointed to as essential to prevent catastrophic climate damage, PwC believes that an ICPF, combined with additional climate ambition and action, would give the world a much greater chance of adhering to 1.5C.

Carbon pricing could be vital in preventing severe climate change

by Matthew AmlotDecember 26, 2021December 26, 2021

The policy represents an effective way to reduce emissions, while paying for itself in revenues gained, PwC finds

Sustainability, reducing greenhouse gas emissions, and the energy transition have been hot button issues for the oil and gas industry as the sector looks to build back from the COVID-19 pandemic. Policy makers around the world have been examining methods to encourage companies to reduce carbon emissions. Among these, instituting carbon pricing, a term referring […]

News, ADIPEC

Egypt hosting COP 27, UAE hosting COP 28 an opportunity to reach “safe shores in the coming few years”: Tarek El Molla

by Matthew AmlôtNovember 15, 2021November 8, 2022

Global energy transition plans need to be "responsible and responsive," the minister added.

Egypt’s hosting of the COP27 climate conference next year, and the UAE’s hosting of COP28 in 2023, are good opportunities to work together and create initiatives which will help the world navigate through the energy transition and climate change, Egypt’s Minister of Petroleum Tarek El Molla said on Monday. Molla was speaking at ADIPEC 2021, […]

Energy Transition

Companies must step up and be accountable: COP26

by Carla SertinNovember 2, 2021November 7, 2021

GRI engagements underline role of transparency in driving action

With the UN Climate Change Conference – COP26 – getting underway in Glasgow next week, GRI is urging all organizations to be open about their impacts on the planet, as transparency is an essential precursor for reaching global solutions to a global problem. GRI, as provider of the common language for companies to communicate their […]

Energy Transition

UK PM Boris Johnson says that world must go “further and faster” to combat climate change

by Carla SertinOctober 26, 2021October 30, 2021

Echoing statements made by HRH the Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud at the original announcement of Saudi Green Initiative, the UK’s Prime Minister Boris Johnson has said the world must go “further and faster” to combat climate change by the middle of the century. In a statement to the inaugural Middle […]

Energy Transition

How the oil and gas industry can turn climate-change ambition into action

by James Thomas, partner, Anil Pandey, senior executive advisor, and Aditya Harneja, manager, with Strategy& Middle East, part of the PwC networkOctober 18, 2021October 18, 2021

As the stewards of GCC economies, NOCs have a great responsibility to help turn climate change ambitions set by governments into action

National oil companies (NOCs) in the GCC have started to articulate ambitious plans to reduce the greenhouse-gas (GHG) emissions from their operations, which are also part of national agendas against climate change. These goals are challenging, and require NOCs to turn these ambitions into actions. At the same time, NOCs must manage perceptional and commercial […]

Energy Transition

Gas to drive realistic energy transition

by HE Yury Sentyurin, Secretary General, Gas Exporting Countries ForumOctober 12, 2021October 12, 2021

HE Yury Sentyurin, Secretary General of the GECF, comments on the role of gas in the energy transition

With such significant events as the G20 Environment, Climate and Energy Ministerial Meeting, the first ever UN High-level Dialogue on Energy and the two-years-long awaited UNFCCC COP26 in Glasgow, United Kingdom next month, 2021 has been dubbed as a year that will ‘make it or break it’ on climate action. Coming on the back of […]

Energy Transition

Climate change discussions rise as US firms take action: GlobalData

by Carla SertinOctober 4, 2021October 4, 2021

Climate change was mentioned more than 210,000 times in GlobalData's Filing Analytics database for 2020 and 2021

Climate policy is a hot topic in the oil & gas (O&G) industry, with the theme ‘Climate Change’ mentioned over 210,000 times in GloblaData’s Filing Analytics database of global O&G company filings in 2020 and 2021 combined – a 41% increase from the 2018-2019 period. The leading data and analytics company says that climate change […]

Carbon pricing could be vital in preventing severe climate change

Egypt hosting COP 27, UAE hosting COP 28 an opportunity to reach “safe shores in the coming few years”: Tarek El Molla

Companies must step up and be accountable: COP26

UK PM Boris Johnson says that world must go “further and faster” to combat climate change

How the oil and gas industry can turn climate-change ambition into action

Gas to drive realistic energy transition

Climate change discussions rise as US firms take action: GlobalData

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