Chemicals giant BASF uses €340 internal carbon price
German firm’s shadow price is substantially higher than peers
German chemical company BASF has revealed it uses an internal carbon price of up to €340 per tonne to inform its investment decisions.
The figure, disclosed in its debut CSRD report, is significantly higher than that of peers such as Lenzing, which says it uses a €75 price for its “strategic investment planning process”.
The Austrian chemical firm added that this internal carbon price is in “addition to the regulatory CO2 prices and is applied uniformly at all Lenzing sites for Scope 1 and Scope 2 CO2 emissions.”
German fertiliser specialist K+S said its internal carbon price, which it uses to help make capital expenditure decisions, was €40 per tonne. However, it said it will reach €215 per tonne by 2050-60.
Timo Ernst, a climate governance specialist at German consultancy Sustainable Group, described BASF’s carbon price as “really high” but said it was fair given the level of investment needed in hard-to-abate sectors such as chemicals.
Based on his experience working with companies last year, Ernst estimated that “shadow prices are usually in the range of €80 and say €160”.
According to data from CDP, the average internal carbon price in 2023 was between $50-$100 (€46- €93) per tonne.
Many remain in this ballpark, according to the most recent batch of corporate sustainability reports.
Food giant Danone cited €90, while Finnish engineering firm Kone and French gas specialist Air Liquide both put the figure at €100.
Acerinox’s 2024 price was €64, but the stainless-steel manufacturer said it was projected to to grow to €134 by 2030.
BASF’s shadow price, which also varies by region and year, is based on three scenarios exploring “different societal preferences and, building on these, climate and economic policy objectives”.
It added that these resulted in “a price per metric ton of CO2 equivalents of up to €340, depending on the year.”
A spokesperson declined to provide further details, telling REP the €340 figure reflected the upper limit of its “green scenario” and was used for internal purposes.
The number of companies publicly reporting the use of an internal carbon price has increased in recent years, but is still below 15%, according to CDP data.
Some companies have spoken out against them, including IKEA, which last month said it would not use a shadow price, citing “unnecessary accounting complexity” and the risk it could be viewed as a “cost to pollute”.
German energy firm RWE “does not use an overarching systematic carbon pricing scheme”, while fashion company Kerring is considering one “to guide its future investment decisions, factor climate risk into its business model and continue to assess its sustainability performance”.
Ernst said it was common for companies to introduce an internal carbon price once they have set targets and developed strategies.
“They’ve probably tackled the low-hanging fruit and are now dealing with more profound changes that are tougher to crack,” he explained.
Official internal carbon prices help legitimise decarbonisation decisions within a firm, and can also raise awareness among employees throughout the company, he added.