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Internal price on carbon (Proposed)


The 2015 iCAP, chapter 9, objective 4 is, "By the end of FY16, evaluate the feasibility of internally putting a price on carbon emissions." A detailed study by campus experts, drawing on expertise of corporate partners and other universities, could be conducted to determine what implementation would make the most sense for our campus. 



At present, our economic environment allows us to add carbon dioxide to the atmosphere with no financial penalty, even though doing so imposes costs on the global environment. The EPA estimates that the "social cost of carbon (SCC)" may be as high as $61 per ton of carbon dioxide. Our current market system treats these costs as “externalities” that are free to the polluter, but the situation may change in the future through the imposition of a carbon cap or carbon taxes, if the global community is to tackle the unacceptably high rate of carbon dioxide emissions.   A report in 2014 indicated that 29 leading American companies have adopted an internal price for carbon emissions ranging from $6-$7/ton (Microsoft) to $60-80/ton (Exxon Mobil), in anticipation of a carbon tax to ensure that their business processes appropriately take the costs of carbon emissions into account. The academic sector is also beginning to consider internal carbon pricing. For example, in Cornell, the president’s climate action acceleration working group has formally recommended implementing a carbon charge on utility bills in the $20-$30/ton range.    Our campus could evaluate the feasibility of implementing an internal price on carbon to provide a direct economic signal to all units producing emissions, and would help drive our campus toward carbon neutrality in advance of future regulatory burdens. For example, at present there is no cost associated with the carbon dioxide emissions from the combustion of coal and gas at Abbott Power Plant; as a result, the campus has no economic incentives to shift toward renewable energy sources. Having an internal price on carbon emissions would help to tip the balance in decision-making in favor of renewable energy. The funds generated by an internal carbon price could be earmarked for projects that would reduce our greenhouse gas emissions and for the purchase of carbon offsets.   

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