“Carbon pricing incentivizes all aspects of the transition to a lower carbon economy and around 40 countries already have some pricing mechanism — whether that’s a tax on emissions or a system of trading permits,” Dudley during a speech at the International Petroleum Week in London.
Dudley noted BP’s latest Energy Outlook 2035, also released during the oil and gas executives’ conference, projects global emissions to rise about 1 percent a year, while the Paris climate agreement requires emissions to fall to hold global warming to well below 2 degrees Celsius.
While companies can take action to reduce their own emissions, “the transition to lower carbon energy has to happen within frameworks that only governments can set,” Dudley said.
Carbon pricing is the most effective way to do this, he said. “It incentivizes greater energy efficiency and energy saving. It incentivizes lower carbon choices — like replacing coal with natural gas in power generation, as well as replacing fossil fuels with renewables or nuclear energy. And it incentivizes investment in R&D to improve energy efficiency and discover the next generation of low carbon technologies.”
This isn’t the first time the oil and gas giant has endorsed carbon pricing. In its Technology Outlook, published late last year, BP said a “modest” price on carbon would make some types of renewable energy competitive with gas-fired power and would make carbon capture technology economical. And its 2015 energy outlook also urged policy makers to put a “meaningful global price on carbon.”