Why carbon pricing is key to our renewable future

This post is part of a series of interviews on the impacts of climate change and the COP21 talks in Paris. The author is one of 78 signatories to an open letter from CEOs to world leaders urging climate action.

How are business innovations helping emerging economies find investment sources to address climate change?
If we are to transition towards a low-carbon world, we will need to draw on innovative low-carbon technologies.

Collaborative platforms should be developed between governments, companies of all sizes and civil society to build capacity in the developing countries that need it most. Working together, we should also establish how to overcome the hurdles preventing existing low-carbon technologies from being adopted more widely.

Around the world, 1.3 billion people have no access to electricity. At ENGIE, with our social investment fund, we support projects by local entrepreneurs, offering long-term access to clean, reliable and affordable energy.

What commitments from the CEO statement you have signed are most important to you?
We strongly support the wider adoption of carbon pricing. This will be key to integrating climate-related externalities into economic logic and redirecting investment towards low-carbon technologies.

It’s something that we at ENGIE have always supported, both in our words and in our actions. For example, as part of the Magritte Group, a coalition made up of Europe’s major utilities firms, I have personally advocated for carbon pricing with the World Bank, at UN summits, and during business meetings as part of France’s COP presidency.

In our actions, we use carbon pricing for our investment decisions reviews, and just this year we decided not to develop new coal-fired power plants: all our new investments in power generation will be focused on projects that emit little or no CO2.

We also reduced our CO2 emissions per kWh by 10% between 2012 and 2020 (a much higher rate when compared to the global average) and have significantly developed our renewable energy capacity in our generation mix: we have increased our power generation from renewables by 50% between 2009 and 2015, and we plan to double the renewable production capacity in Europe by 2025.

The low-carbon transition to 2°C is a tough challenge, but it is feasible.

Why does climate change matter to your industry and to you personally?
It matters to us because we need to be in line with a maximum 2°C temperature rise, and avoid disastrous consequences for our planet. And what we do in the next 10-20 years can have a profound effect on the climate in the second half of this century.

Energy production and consumption is responsible for 60% of global greenhouse gases emissions. This means that we need to transition to a low-carbon economy, sooner rather than later. We’ve started to develop low-carbon solutions, but we want to do more and lead the way.

The main driver for business development has always been consumer demand. More and more, consumers are demanding that we help them tackle climate change. Our industry is undergoing a digital revolution that will help consumers do just that: new apps, for example, can help them understand their energy usage, and therefore make better decisions. Another technology we offer consumers is the ability to regulate the temperature in their homes from a distance, by simply using their computer.

Author: Gerard Mestrallet, Chairman and CEO, ENGIE, France

Image: Smoke billows out from the cooling towers of a coal-fired power plant in Ahmedabad, India, November 20, 2015. REUTERS/Amit Dave