Why Set An Internal Carbon Price?

Illustration of price tag hanging from a cloud of carbon dioxide vapour

Can You Simply Model A Carbon Price When It Comes To Investment Decisions Or The Effect Of Carbon Taxes?

Current carbon price initiatives only cover ~15% of global emissions, and ~75% of these emissions were priced at under $10/tonne until recently.

The European Emissions Trading Scheme (ETS) is the world's largest carbon market and its current phase prices has recently touched €25/tonne. This is starting to get accountants attention.

The World Bank has supported the High-Level Commission on Carbon Prices, co-chaired by Joseph Stiglitz and Lord Nicholas Stern.

This suggested a $40-80 per tonne CO2 price by 2020 and $50-100 per tonne CO2 by 2030 as these carbon price target goals were found to be consistent with the temperature goal of the Paris Agreement COP23, signed up to by every country in the world (though one is currently looking to leave it)

Microsoft have used internal carbon pricing since 2012. You can read more about their projects here The Microsoft carbon fee: theory & practice.

If your organisation has not set an internal carbon price, perhaps a €/$/£20-30 per tonne price would be a good starting point.

If this money is collected or set aside, it might then be utilised for further carbon reduction projects and technology deployment.

$20, £20 or €20 / tCO2.

Alternatively, you can set a carbon price at a low level, but increase it year on year by a set amount or set price.  This will help future proof projects as carbon prices are expected to increase as supply decreases and demand increases.

EnergyElephant recently launched its Carbon Analytics page to help users see how much CO2 they emit (directly and indirectly).

As part of this we help users set a carbon price to show how much it might be costing them. It can also be used to model future carbon prices and their effects on the business.

This allows users quantify and set aside budget to run additional carbon reduction projects.

For a more in-depth analysis of setting internal carbon prices, please contact us directly.