Businesses request significant carbon taxes from the G7 leaders
During the 48th G7 summit, which will be held in Germany from June 26 to 28, multinational corporations are urging world leaders to set a price on carbon to combat climate change.
C-suite executives from major multinational corporations like Bank of America, Shell, and others advised G7 summit attendees to implement a meaningful carbon price at about $70 to increase demand for clean technology.
The Sustainable Markets Initiative's (SMI) 400 corporate executives proposed carbon pricing in an open letter that was released yesterday, June 26. They suggested setting it at $30 to $70 per tonne to avoid coal, $70 to $120 per tonne to invest in hydrogen production methods, and above $120 per tonne to invest in negative-emissions technologies like removing carbon dioxide from the atmosphere.
The letter states that "to release all this investment, of course, the carbon price must rise in line with the global economy’s ability to absorb it and governments must address the near-term challenges for consumers facing the rising cost of energy."
As Germany and other European nations increase their coal power in an effort to conserve gas after Russia cut off supplies, the energy crisis brought on by Russia's invasion of Ukraine is already undermining efforts to phase out coal. As a result, there was an increase in private investment in energy-efficient infrastructure. The SMI executives note that this investment must be accelerated with G7 incentives to address the impending gas supply shortage.
The SMI also advocated for the global ban on coal power by 2040, with advanced nations following suit by 2030. They draw attention to the fact that the building and construction industry accounts for 40% of global emissions and has a greater need for the deployment of cutting-edge optimisation technologies.
The recommendations of the SMI are in line with the five objectives of Germany's G7 Presidency, which include forging solid partnerships for a sustainable planet and charting a course for long-term economic stability. The G7 agenda aims to address any gaps in global energy policy in the midst of the conflict in Ukraine.
If the G7 unanimously approves the $30-$120 carbon pricing scale, it will likely be implemented alongside other regional and national environmental tax policies, such as carbon border adjustment mechanisms (CBAMs).
The call for a carbon price scale coincides with political initiatives to advance environmental tax policies on both sides of the Atlantic.
A US congressional bill that would impose an import carbon tax of $55 per tonne of carbon dioxide is up for a vote soon. In the meantime, the European Parliament reached agreement on a CBAM draft and will begin talks with the European Council as early as August.
By fLEXI tEAM