Carbon Pricing Resources
The Social Cost of Carbon
Activities that emit greenhouse gases contribute to climate change impacts and impose costs that are distributed globally, and not directly paid by emitters. Since they don’t pay the costs, it is difficult to motivate large scale reductions in extraction and emission of carbon. Carbon pricing schemes are strategies to make those in the production chain of fossil fuels pay for the damages that their fossil fuels cause.
Estimates of the social cost of carbon range widely because many impacts of climate change are difficult to predict and difficult to quantify. A calculation of how much an additional metric ton of CO2 adds to these costs is imprecise and there is widespread disagreement about the estimates.
The EPA published a widely-cited estimate of the social cost of carbon at around $38 per metric ton of CO2 in 2016. Their calculation includes decreases in agricultural productivity, human health costs, flood damages, and changes in energy system costs like heating and air conditioning. The social cost of carbon increases slightly each year, to account for the non-linear climate impacts as we continue to emit more carbon.
Read about the EPA's estimate of the social cost of carbon.
The EPA's analysis is generally considered a lower bound on the actual cost of carbon, because it assumes that many costs that are difficult to predict, quantify, and monetize are simply zero. Some of these omitted damages include soil erosion, fires, declines in economic growth rate, loss of ecosystem services, spread of pests and pathogens, social and political conflict, and ocean acidification.
Read about an analysis that incorporates the impact of climate on economic growth, and estimates a cost of $220 per ton CO2.
Read an analysis of some of the threats of climate change that are omitted from the EPA's estimate. [pdf]
Carbon Pricing in Higher Education
Learn more about Vassar, Yale, and Swarthmore's proposals and programs for internal carbon pricing. Last year, Yale ran a pilot program with four different internal carbon pricing mechanisms to learn about best practices for carbon pricing at a university scale. Vassar developed a theoretical analysis of carbon pricing schemes at a small liberal arts college, and will be working towards implementing a shadow price this year.
- Read a white paper proposing Swarthmore's internal Carbon Charge by Swarthmore faculty.
- Read a white paper on Internal Carbon Pricing at a Small Liberal Arts College by Vassar and the Environmental Defense Fund. [pdf]
- Visit Yale's website on their internal carbon pricing program.
- Read a white paper on the proposal for the Yale Carbon Charge Project. [pdf]
Carbon Pricing Policy
Swarthmore's internal Carbon Charge is modeling a policy that many economists believe would make a massive difference in mitigating the threats of climate change.
- Read the World Resources Institute's summary of different policy options for a carbon price. [pdf]
- Read about the Carbon Fee and Dividend proposal for national carbon price legislation.
- Read about the Carbon Disclosure Project's summary of the rapid rise of internal carbon prices in businesses globally. [pdf]