What is an internal carbon price?
An internal carbon price is a fee that companies voluntarily charge themselves for their greenhouse gas emissions. This helps them incentivize and fund emissions reductions.
It is distinct from the price of carbon credits, which represent a market-based mechanism for offsetting emissions.
It is distinct from the price of carbon credits, which represent a market-based mechanism for offsetting emissions.
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How Microsoft implemented an internal carbon price
Microsoft implemented an internal carbon price in July 2012, charging different divisions in the business different prices per ton of carbon emitted. For example $15 for emissions related to electricity use, $100 for business travel and $8 for all other emissions.
The company has committed to becoming carbon negative—meaning, they will reduce their carbon emissions deeply and remove more carbon than they emit—by the year 2030. By 2050, their goal is to remove from the environment all the carbon the company has emitted since it was founded in 1975.
The company has committed to becoming carbon negative—meaning, they will reduce their carbon emissions deeply and remove more carbon than they emit—by the year 2030. By 2050, their goal is to remove from the environment all the carbon the company has emitted since it was founded in 1975.
Learn more (via Microsoft Industry Blogs)
Benchmark carbon prices
According to OpenEarth Foundation’s own aggregation
Shell
2030
Scope 1
Scope 2
Scope 3
USD12500 per CO2 Ton
Shadow Price
Microsoft (Travel)
2022
Business Travel
USD10000 per CO2 Ton
Internal Fee
Disney
2013
Scope 1
Scope 2
USD1000 per CO2 Ton
Internal Fee
Danone
2018
Scope 1
Scope 2
USD3760 per CO2 Ton
Shadow Price
Microsoft
2022
Scope 1
Scope 2
Scope 3
USD800 per CO2 Ton
Internal Fee
Sweden
2021
Fossil Fuels
USD11470 per CO2 Ton
Carbon Tax
European Union ETS
2022
Energy Sector
Manufacturing Industry
USD9338 per CO2 Ton
Emissions Trading System
British Columbia (CA)
2022
Fossil Fuels
USD3660 per CO2 Ton
Carbon Tax
Chile
2021
Power Sector
USD500 per CO2 Ton
Carbon Tax
See More Carbon Taxes (via World Bank)
Berkeley-RFF Greenhouse Gas
Impact Value Estimator (GIVE)
Impact Value Estimator (GIVE)
2020
2% Discount Rate
$18500 per CO2 Ton
Recommended Price
IMF (High-income)
2022
Price Floor
High-income Countries
$7500 per CO2 Ton
Recommended Price
IMF (Low-income)
2022
Price Floor
Low-income Countries
$2500 per CO2 Ton
Recommended Price
High-Level Commission
on Carbon Prices
on Carbon Prices
2017
Price Range
$4000 to $8000per CO2 Ton
Recommended Price
CEPAL
2019
LATAM Countries
$1233 per CO2 Ton
Recommended Price
What is the purpose of a carbon price?
A carbon price is a monetary value placed on the amount of carbon dioxide emissions produced by an organization. The purpose of setting a carbon price is to incentivize companies to reduce their carbon footprint and transition towards more sustainable practices. By putting a price on their emissions, companies are encouraged to invest in clean energy, energy efficiency and other measures to lower their carbon emissions.
Learn more (via Carbon Pricing Dashboard)
Drive innovation and become more competitive
Be a first mover and industry leader on decarbonization
Plan ahead by incorporating climate risk
Show you are a purpose driven organization
How can I calculate mine
Go to the Carbon Pricing calculator
Learn more about
implementing a carbon price
implementing a carbon price
What are the different types of carbon prices?
Common types of carbon prices include carbon taxes, cap-and-trade systems, and internal pricing. Carbon taxes are government fees on carbon content. Cap-and-trade limits emissions and allows for buying/selling emission allowances. Internal pricing, a shadow price or fee, is self-imposed by companies to reflect the cost of emissions on the environment and simulate future regulations.
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What are ways to implement a carbon price?
Implementing a carbon price starts with tracking emissions, setting clear goals and understanding the factors that impact your footprint and climate and regulatory risks. Then, choose a pricing method that aligns with your goals and ensure robust data management and reporting. Finally, engage stakeholders and communicate the impact of your carbon pricing program
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Internal Fee vs Shadow Price
Internal Carbon Fee and Shadow Price are two methods for setting a carbon price within an organization. An Internal Fee is a revenue generating fee charged internally within the company for emissions from their operations, while a Shadow Price is a theoretical carbon price that is used to estimate the future cost of carbon regulations and help with decision making.
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What is the Social Cost of Carbon?
The Social Cost of Carbon (SCC) measures the economic damage from each ton of CO2 emissions. It factors in impacts to human health and property damage from climate change. The SCC helps with decision-making and can serve as a basis for carbon pricing. By using the SCC in their pricing, companies can account for the real cost of emissions and make better decisions for both business and the environment.
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“Money for ton” vs “Ton for ton”
Carbon pricing can be expressed in two ways: “money for ton” refers to the damage costs related to each ton of carbon emissions, while “ton for ton” refers to the cost of offsetting each ton of emissions. “Money for ton” uses the concept of Social Cost of Carbon to derive the damage each ton of CO2 produces. It is the recommended approach since it incentivizes organizations to reduce emissions by pricing in their real costs.
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