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
Briefly articulates the core goals and mission statements of four internal carbon pricing programs in higher education.
Video: Context for Internal Carbon Pricing in Higher Education
Smith College, 2019 
Short (8 minute) video of Alex Barron, Assistant Professor of Environmental Science and Policy, presenting on the broader context for internal carbon pricing in higher education.
Peer-reviewed paper: Carbon pricing approaches for climate decisions in U.S. higher education: Proxy carbon prices for deep decarbonization
Smith College and Princeton University, 2018 (new version 8/18/20)
Paper by Alexander R. Barron, Breanna J. Parker, Susan S. Sayre, Shana S. Weber, and Dano J. Weisbord. Published in Elementa: Science of the Anthropocene.
Abstract: Given the slow policy response by governments, climate leadership by other institutions has become an essential part of maintaining policy momentum, driving innovation, and fostering social dialogue. Despite growth in carbon pricing in government and the private sector, our review suggests low, but growing, adoption of internal carbon prices (ICPs) by higher education institutions (HEIs), who may be uniquely suited to implement and refine these tools. We analyze the range of ICP tools in use by eleven U.S. HEIs and discuss tradeoffs. Our analysis identifies several reasons why proxy carbon prices may be especially well-suited to decisions (especially at the system-scale) around carbon neutrality at a wide range of institutions. Using a unique dataset covering 10 years of real-world analysis with a proxy carbon price, we analyze the interaction of ICPs with life cycle cost analysis to start to identify when and how internal carbon pricing will be most likely to shift decisions. We discuss how schools and other institutions can collaborate and experiment with these tools to help drive good climate decision-making and inform climate policy at larger scales.
[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).