Carbon pricing

I was surprised by the lack of any analysis of economic instruments to price carbondioxide emissions in your excellent special report on the oil industry (March 16th). Many economists regard such carbon-pricing mechanisms as critical to achieving climate goals. European companies such as Shell have promoted these tools since around 2000.

Indeed, at a meeting convened in the Vatican in 2019, at which I was present, the chief executives of all the big American and European oil companies, together with important investors, signed a declaration calling for governments to establish “reliable and economically meaningful carbon-pricing regimes, whether based on tax, trading mechanisms or other marketbased measures…at a level that incentivises business practices, consumer behaviour, research, and investment to significantly advance the energy transition while minimising the costs to vulnerable communities and supporting economic growth”.

Although carbon pricing is spreading around the world it would be interesting to see an analysis of its successes and failures, explaining why this important economic tool has not been more enthusiastically embraced. Is it suspicion of the support by industry, reluctance of state-owned companies, focus on supply-side restrictions by environmental groups, or fear of a consumer backlash?

I look forward to an article in The Economist on this issue. We need as many tools as possible to accelerate the energy transition.

MARK MOODY-STUART

Former chairman of Shell

Hassocks, Sussex