Business Roundtable: Market-Based Solutions Best Approach to Combat Climate Change

Ahead of Climate Week, Business Roundtable has released new principles and policies this week to address climate change, including the use of a market-based strategy that includes a price on carbon where feasible and effective. Such a strategy would incentivize the development and deployment of breakthrough technologies needed to reduce greenhouse gas (GHG) emissions. 

To combat the worst impacts of climate change, Business Roundtable CEOs are calling on businesses and governments around the world to work together to limit global temperature rise this century to well below 2 degrees Celsius above pre-industrial levels, consistent with the goals of the Paris Agreement. In the United States, this means reducing net-greenhouse gas emissions by at least 80 percent by 2050 as compared to 2005 levels.

“Climate change is one of the greatest challenges facing the planet today, and we believe businesses are an essential part of the solution,” said Doug McMillon, President & Chief Executive Officer of Walmart and Chairman of Business Roundtable. “Representing more than 200 CEOs from America’s leading companies, the new Business Roundtable position on climate change reflects our belief that a national market-based emissions reduction policy is critical to reducing greenhouse gas emissions to levels designed to avoid the worst effects and mitigate the impacts of climate change.”

Since 2007, Business Roundtable has called for collective action to address climate change. There are a number of different ways to design effective policies to address climate change and Business Roundtable is not endorsing any specific mechanism. Business Roundtable outlined the following principles to guide the creation and implementation of policies to address climate change:

• Align policy goals and GHG emissions reduction targets with scientific evidence;
• Leverage market-based solutions wherever possible;
• Increase global engagement, cooperation and accountability;
• Provide for adequate transition time and long-term regulatory certainty.
• Preserve the competitiveness of U.S. businesses, including avoiding economic and emissions leakage;
• Minimize social and economic costs for those least able to bear them;
• Support both public and private investment in low-carbon and GHG emissions reduction technologies along the full innovation pipeline;
• Minimize administrative burdens and duplicative policies while maximizing compliance flexibility;
• Ensure U.S. policies account for international emissions reduction programs;
• Advance climate resilience and adaptation; and
• Eliminate barriers to the deployment of emissions reduction technologies and low-carbon energy sources.

“Climate change is real, and we must act. Meeting the scope of this challenge will require collective global action – business and government. The Business Roundtable goals are ambitious, but achievable, and we encourage business leaders across industries to do their part,” said Mary Barra, Chairman and CEO of General Motors Company.

The leading recommendation in a complementary portfolio of policies that would best fit these principles is the implementation of a well-designed market-based mechanism that would drive innovation and reduce the administrative complexity and uncertainty associated with a regulatory approach to limiting emissions. This includes:

• Placing a price on carbon where environmentally and economically effective and administratively feasible;
• Preserving the competitiveness of U.S. businesses;
• Using resulting revenues, if any, to maximize economic and environmental benefits; and
•  Addressing and avoiding duplicative, inefficient or counterproductive federal and state regulations.

“We are committed to leading by example,” said Ryan Lance, Chairman and Chief Executive Officer of ConocoPhillips. “The U.S. can do the same by adopting a credible, durable and comprehensive climate change strategy with market-based solutions to reduce emissions across the economy while increasing adaptation, resilience and regulatory simplification.”

Business Roundtable is also recommending the following supporting policies and approaches essential to meet the scope of the climate challenge:

• Investing in technology by at least doubling federal funding from current levels for advanced energy innovation and doubling total climate-related research funding; 
• Driving energy efficiency with policies that incentivize continued improvement in buildings, equipment, appliances, transportation and manufacturing as well as in the electricity sector;
• Developing and deploying resiliency and adaptation measures; and
• Investing in energy infrastructure and improving permitting processes to speed the transition to a low-carbon economy.

To read the full set of policy principles and recommendations, click here.