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“Energy Transformation and Its Impact on Oil Companies’ Portfolios” – Helle Kristoffersen

Helle Kristoffersen, Senior Vice President, Strategy and Corporate Affairs, Gas, Renewables & Power, Total

“Energy Transformation and Its Impact on Oil Companies’ Portfolios”, 8:45 am – 10:15 am, 18th January 2017, Breakfast Meeting WFES 2017

Extracts from discussion on carbon pricing:

Helle Kristoffersen: … “we need a price on carbon because it is the best way  …. to create a rule for the private business, number 2, it is the best way to push out coal from electricity generation and therefore create a space for natural gas and renewables.

There is a business model behind what we do, we think there is a business model for natural gas and renewables …. [which] effectively penalizes coal more than any other body else, and we have ourselves been putting a price on carbon in our business reviews, … in the oil and gas business.”

Andrew Palmer: “What do you think is an economic price for carbon which will allow you to do what you need to do?”

Helle Kristoffersen: “It is not clear that there will be one [global] carbon price, which is itself an issue. Say that for all the European players, [from] whatever industry, it will be an economic disadvantage [compared to] non-European [firms], for they will have an extra cost … it could be in steel, not just in oil and gas. But we think that’s better than no carbon price at all. So, therefore there will not be one price level, and I think that that [price levels] will be dependent on local regulations and local economic conditions.

I can tell you that we have been using an internal carbon price today and we have been increasing that between $30 and $40 [tCO2e].”

Andrew Palmer: “I was going to say $50 but there we are.”

Helle Kristoffersen: referred to the European carbon trading scheme (EU ETS).

Andrew Palmer: “I would have thought that you are going to see a recommendation at COP 24, or thereabouts. There has to be a global recommendation, it cannot be Europe-wide, or American, otherwise it’s going to be a huge impediment to trade, particularly for a business like yourselves.”

Helle Kristoffersen: “I would rather see parts of the world move ahead, than just sit down [and wait].”


Carbon Trading

The European carbon trading scheme (EU ETS) is the world’s first major carbon market and remains the biggest one. See http://ec.europa.eu/clima/policies/ets_en .

The EU ETS works on the ‘cap and trade’ principle.

cap is set on the total amount of certain greenhouse gases that can be emitted by installations covered by the system. The cap is reduced over time so that total emissions fall.

Within the cap, companies receive or buy emission allowances which they can trade with one another as needed. They can also buy limited amounts of international credits from emission-saving projects around the world. The limit on the total number of allowances available ensures that they have a value.

There is also an interesting contribution from The World Bank on the subject of carbon pricing, Carbon Pricing Watch 2016: https://openknowledge.worldbank.org/bitstream/handle/10986/24288/CarbonPricingWatch2016.pdf?sequence=4&isAllowed=y

(c) Andrew Palmer, 2017

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