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CDP: US Utilities Now Pricing Carbon as Part of Core Business Strategy

Image credit: CDP

In response to increasing recognition of climate risk, CDP has released a new white paper containing fresh insights into how a price on carbon pollution might benefit companies and the US economy as a whole. Contributors include American Electric Power (AEP) chairman Nick Akins, former Governor and EPA Administrator Christine Todd Whitman, along with investors, policy experts from Stanford and Columbia Universities, and other select thought leaders.

"In the wake of the EPA’s Clean Power Plan announcement, understanding today’s policy context on carbon emissions and the upsides and downsides facing American corporations and communities has become critical aspect of business planning,” said Tom Carnac, CDP’s President for North America. “Pricing that risk with a cost for carbon pollution is one way of addressing the significant financial impacts that face companies as a result of global warming."

Insights include:

  • Xcel Energy’s VP for Policy & Strategy, Frank Prager, says the company has already scheduled certain coal plant retirements that it considered economic with or without carbon policy assumptions, but continues to utilize an internal price on carbon for proxy planning purposes to reduce future carbon risk faced by the company and its customers;
  • AEP's chairman Nick Akins describes how the company uses an internal price on carbon in resource planning to assess future policy and regulatory risk, and to ensure that as a high emitter of carbon pollution they are making prudent capital investments that are not at risk of being stranded in a low-carbon future; and
  • Bob Litterman, former chairman for investment strategy at Goldman Sachs, describes how without proper pricing of carbon risk, investors also face the potential of stranded assets — portfolios full of companies that cannot burn the fossil fuels in their reserves.

Further perspectives in the paper are provided by

  • Columbia University Jason Bordoff, Professor of Professional Practice in International and Public Affairs, Founding Director, Center on Global Energy Policy;
  • Exelon Corporation Christopher D. Gould, Senior Vice President, Corporation Strategy and Chief Sustainability Officer;
  • Generation Investment Management Tammie Arnold, Global Head of Client Relations;
  • Governor Christine Todd Whitman Former Governor of New Jersey and administrator of the US Environmental Protection Agency;
  • Microsoft Corporation Rob Bernard, Chief Environmental Strategist;
  • Pax World Funds Julie Fox Gorte, PH.D, Senior Vice President for Sustainable Investing;
  • Stanford University Internal Carbon Pricing at Royal Dutch Shell, Stephen Comello and Stefan Reichelstein, Graduate School of Business and the Steyer-Taylor Center for Energy Policy and Finance;
  • TD Bank Group Karen Clarke-Whistler, Chief Environment Officer;
  • The Walt Disney Company Beth Stevens, Ph.D., Senior Vice President, Corporate Affairs; and
  • World Bank Rachel Kyte, Vice President, Climate Change.

The paper is part of a series of recent reports by CDP, a leading environmental organization that gathers environmental information on behalf of leading investors, on how businesses are addressing emerging issues in climate change.


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