Putting a price on carbon emissions

November 16, 2021 | Gabriel Flores


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For long-term investors, factoring in the additional cost of carbon should be taken into account.

On the heels of the COP26, where little substantial progress was made in delivering concrete actions to curb climate change and global warming, one of the topics explored was putting a price on carbon.

 

Conceptually, continuing to emit carbon in the form of Carbon Dioxide (CO2) without attaching any monetary cost only burdens future generations who will be faced with the task of scrubbing that same carbon from our atmosphere. At some point, we cannot continue along their route with reckless abandon. For long-term investors, factoring in the additional cost of carbon should be taken into account.

 

In the analysis piece written by Frédérique Carrier featured here, several avenues are described in how carbon budgets will need to be thought of at the country and company level. Whether cap-and-trade, voluntary carbon offsets, or an outright carbon tax, the continuing rise of CO2 is undeniable, despite a brief respite during the depths of the coronavirus global shutdown, during which time air quality improved.

 

Today, with global 'pent-up' demand for goods causing supply chain choke points, and 'revenge' travel happening it would seem we have learned little since the first climate conference in solving for the variable causing the most damage to the planet: human behaviour.