What? Total, the world's fourth largest oil and gas company, announced it will apply a $30 to $40 carbon price per barrel of oil when evaluating the production costs of future investments. The French company also indicated it will reduce exposure to Canada's oil sands and will not conduct oil exploration or production operations in the Arctic ice pack. Total plans to also increase its investment in renewable energy (solar and biofuel) and storage technologies. The company says the move is part of its commitment to the recent COP21 Climate talks in Paris and the goal to keep the average global temperature increase below 2°C.
So what? Total's carbon-costing business strategy could be the beginning of a global oil-climate index, one in which petroleum companies integrate climate-related carbon costs into their business analysis of different global oil reserves, including aspects from extraction to refinery activities. Such an oil-climate index could have a major impact on the Canadian oil industry. The integration of carbon costs into oil companies' business models could greatly reduce, and even stop, further investment in Canadian oil sands which have a larger carbon footprint than many other oil reserves. It could also slow or prevent fossil fuel exploration in the Canadian Arctic. Conversely, it could drive Canadian innovation in technologies to reduce the carbon footprint of downstream operations, thereby lowering the overall carbon cost of Canadian fossil fuels.
Source: Total – Integrating Climate into our Strategy