Colleges and universities contribute to climate change and can be leaders in preventing its worst impacts.  This effort takes a variety of forms, including commitments to achieve carbon neutrality, faculty research on climate science and solutions, and the preparation of students to transition to a low carbon economy.  One particularly promising avenue for advancing climate change solutions is to price carbon, and, that way, improve the competitiveness of zero- and low-carbon options.

Momentum for carbon pricing is building globally: as of 2018, 51 nations or subnational jurisdictions currently, or soon will, price carbon.[1]  Among the U.S. public, 68% of people support a carbon tax on fossil fuel companies, with a majority in every state.[2]  Eighty-one percent of polled economists with published work on climate change identify a carbon price as the most efficient way to meet climate targets.[3]  In the private sector, 607 companies currently use an internal carbon price of some kind, and a further 782 report their intent to price carbon in the next two years.[4]  However, corporations may be limited in the details they can share about their internal carbon pricing systems.  Institutions of higher education, in contrast, can experiment openly, sharing the details and results of their programs and supporting research to inform future policy.

As trusted figure with a wide public reach, colleges and universities have a distinct opportunity to develop and share a stronger understanding of carbon pricing systems.  Schools can support related faculty research, facilitate community education, and endorse a price on carbon, among other actions. In this context, higher education is the ideal institution for experimenting with carbon pricing solutions.  It is a place to advance both research and educational goals on the issue while helping colleges and universities reach emission reduction goals, prepare for external carbon prices, and reduce utility costs.  And even though institutions of higher education may target disparate objectives, internal carbon pricing is flexible enough to reflect this variation. Carbon pricing solutions can be built to:

Frame resource allocation decisions

Limited resources make it difficult to fund emissions reduction measures.  An internal price can clarify when emissions reduction projects are worth the financial investment.

Incent emissions reductions

A carbon price can encourage decision-makers at all levels to reduce emissions cost-efficiently and support schools’ climate targets.

Reduce utility expenses

Internal carbon pricing can provide a price signal that highlights hidden energy loads and incents energy efficient measures.

Raise revenue for sustainability work

Internal carbon levies can provide a revenue stream to support climate-related projects on campus.

Engage the campus community in climate solutions

A price can provide a platform for education and engagement about the climate crisis and potential solutions.

Provide a subject for research

Faculty and student research on institutional carbon pricing systems can advance climate policy and inform local, state, and national policy design.

Build momentum for state and national carbon pricing

Higher education can contribute foundational knowledge and momentum to larger scale policy solutions—those at the state or national level.

Prepare an institution for an external price[5]on carbon

It is highly probable that schools will be subject to state or national carbon prices before the decommissioning of buildings that are constructed today.  An internal price can ensure that decisions today are optimized for operation under an external price.

Resource library

Primary Resource: Higher Education Carbon Pricing Program Statements of Intent

Arizona State University, Swarthmore College, University of British Columbia, Yale University

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Briefly articulates the core goals and mission statements of four internal carbon pricing programs in higher education.

Guidance: Proxy Carbon Pricing for the Third Sector: Potential leadership from non-profits and academic institutions

Smith College, 2018

Working Paper by Alexander R. Barron, Susan S. Sayre, Dano J. Weisbord, and Breanna J. Parker

Abstract: Given the slow policy response by governments, climate actions by non-state actors have become an essential part of maintaining policy momentum, driving innovation, and fostering social dialog.  Despite rapid growth in carbon pricing in government and the private sector as well as several characteristics of third sector institutions (academic institutions, NGOs, etc.) that make internal carbon prices (ICPs) a potentially attractive policy tool, our limited data suggest low (but growing) adoption of ICPs in the third sector.  US academic institutions, in particular, have taken on strong climate commitments which may benefit from adoption of ICPs.  We review potential ICP mechanisms and the existing practices in US higher education and highlight reasons why proxy carbon prices may be especially well suited to many third sector firms. We discuss how the public-benefit focus of third sector firms may alter the balance of choice criteria for an ICP value.  We conclude by describing the interaction of ICPs with life cycle cost analysis, offering insight on when and how internal carbon pricing may be most likely to shift decisions.

For more information on this working paper, contact Alex Barron at abarron@smith.edu

 


[1] World Bank and Ecofys, “States and Trends of Carbon Pricing 2018,” May 2018, World Bank, https://openknowledge.worldbank.org/bitstream/handle/10986/29687/9781464812927.pdf?sequence=5&isAllowed=y, Page 8

[2] Marlon, J., Howe, P., Mildenberger, M., Leiserowitz, A., Wang, X., “Yale Climate Opinion Maps 2018,” August 7 2018, Yale Program on Climate Change Communication, http://climatecommunication.yale.edu/visualizations-data/ycom-us-2018/?est=reducetax&type=value&geo=state

[3] Marlon, J., Howe, P., Mildenberger, M., Leiserowitz, A., Wang, X., “Yale Climate Opinion Maps 2018,”

[4] CDP, “Putting a Price on Carbon,” October 2017,  https://b8f65cb373b1b7b15feb-c70d8ead6ced550b4d987d7c03fcdd1d.ssl.cf3.rackcdn.com/cms/reports/documents/000/002/738/original/Putting-a-price-on-carbon-CDP-Report-2017.pdf?1507739326 Page 8

[5]The term “external price” refers to a price set by a governmental entity within its jurisdiction.  Such policies require external payments from an organization. Yale, for instance, operates within the jurisdiction of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade system among northeast and mid-Atlantic States.  Although Yale’s power plants are small enough to be exempted from the program, future regulations could subject the university to a carbon price, in which case the voluntary internal carbon charge would allow for a seamless transition into an external pricing system (Yale Carbon Charge, 2016).