Emissions must be priced even in activities in countries still lacking a regulated carbon market, like Brazil, executive says
06/20/2022
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Charles Fernandes — Foto: Leo Pinheiro/Valor
Companies that want commitments to sustainability need to start including the cost of carbon emissions in their operations, said Charles Fernandes, managing director and country chair for Brazil at TotalEnergies.
The executive believes that emissions must be priced, even in those activities in countries like Brazil that still lack a regulated carbon market.
“Every company with commitments to sustainability has to price in this matter. That way, it sends a message about which is the right direction for the capital,” he said.
Estimating costs associated with carbon in each project helps companies not to push to the back burner matters that may turn them less viable in the future, Mr. Fernandes said.
The French company’s executive also highlighted that pricing emissions forces every investment to be as efficient as possible.
“When we launch a project today, we estimate the price of carbon to evaluate if the initiative is still robust in a scenario in which emissions have a price. In our view, companies have the responsibility to start pricing in the vision that carbon will have a price five or 10 years from now. This way, investment decisions will be aligned to that,” he said.
The debate about voluntary and regulated CO2 markets is related to the transition to a low carbon economy in search of tackling climate changes.
The executive believes that the debate about taxing carbon will gain ground in Brazil in the next three years. “Brazil does not price emissions yet, but companies need to start setting a price for that,” he said.
Last month, the federal government published the decree that created a carbon market in Brazil. Mr. Fernandes said that it is still unclear when companies will start to effectively pay for emissions in the country. Yet, this is an “unavoidable” trend, he said.
“In Europe, there is already a market and, depending on the level of emissions, the company has to pay a given cost for the emissions, which changes according to the carbon price in the market. This is the trend in the world,” he said.
In the context of the energy transition, TotalEnergies defined that it will set aside 25% of global investments to renewable energies. Another slice of 25% will be injected into projects for the transition to a low-carbon economy, which is the case of liquefied natural gas projects.
As a result, the investments to maintain the current businesses in the oil and gas industry will receive only 50% of the total investments.
In Brazil, TotalEnergies currently produces 66,500 oil barrels a day and 2.5 million cubic meters of gas a day, data by the National Agency of Petroleum (ANP) show.
The low cost and the low rate of emissions of oil and gas produced in Brazil turn the country into a key region in the company’s portfolio, Mr. Fernandes said.
In the renewables segment, the company works through subsidiary Total Eren, which totals 300 megawatts in solar and wind generation assets in operation in the country.
The company has also shown interest in investing in offshore wind power generation and has a team tasked with studuying opportunities in this segment here. Brazil does not have offshore wind power projects, and regulations for the segment are still in the making.
“We are interested, and we count on regulation to be defined to move forward with that,” said Fernanda Scoponi, senior business developer at TotalEnergies, at an industry event this week in Rio.
*By Gabriela Ruddy — Rio de Janeiro
Source: Valor International