Tata follows Norway’s Statoil down carbon-pricing path

Tata is installing shadow carbon price in the group, which spans motor car manufacturing to IT consulting

Tata Group, India’s biggest conglomerate, is following oil and mining companies including Statoil ASA in preparing to pay for their emissions.

Mumbai-based Tata is installingaso-calledshadowcarbon price in the group, which spans motor car manufacturing, information technology consulting, tea production and steel, Paul Brooks, group director environment, said by e-mail on Thursday. Tata may be ready to buy emission credits in the future, he said.

Fossil-fuel producers are among companies that already use shadow carbon prices to help ensure that future multibillion-dollar projects remain profitable as governments tighten environmental rules.

Tata is adopting them progressively for its 100 companies as the Paris climate deal requires nations to cut emissions and investors lose appetite for climate-damaging projects, Brooks said.

“Companies can’t ignore the regulation and impacts of climate change,” Martijn Wilder, head of the climatechange practice at law firm Baker & McKenzie in Sydney, said Thursday by telephone from Oslo. While the Paris climate deal is not binding on companies, it clearly shows that profits from emissionsproducing activities will be constrained,whichexecutives need to respond to, he said.

Statoil, Europe’s biggest natural gas producer, supports a global carbon price to lower emissions, according to spokeswoman Elin Isaksen.

The company reconsiders its shadow price, currently $50 a metric tonne of carbon dioxide, each year and hasn’t revieweditsincetheParisagreement, she said by e-mail.

The benchmark European Union carbon price rose 0.2% Friday to 5.72 euros ($6.44) a metric ton on the ICE Futures Europe exchange .

India’s emissions are expectedtoriseatthefastestpace through 2040, according to Bloomberg New Energy Finance. Tata Group is preparing to react to climate pledges being made by countries in which it operates, known as nationally determined contributions under the United Nations climate-protection process, Brooks said last monthattheCarbonExpoconference in Cologne, Germany.

“Without a combination of the private sector and carbon pricing, the nationally determinedcontributionsprobably won’t be delivered,” he said. “We see investors losing some appetite for carbon-intensive ventures. We see emergence, I use that word liberally, of a globalcarbonmarket.Weseeit coming, but we don’t see it there yet.” Bloomberg