Carbon Pricing in the Private Sector

March 27, 2019

Project Summary

Although the US does not have a national regulatory policy on carbon emissions, an increasing number of large companies in the United States are reporting the strategic use of carbon pricing methods to make internal decisions about how to invest in their businesses. The increasing prevalence of private-sector initiatives to reduce carbon emissions has spawned growing interest in both how and why private organizations are using carbon-pricing strategies. This paper examines a broad cross-section of self-reported motives, methods, and prices used by private companies currently engaging in some degree of internal carbon pricing.

Why companies price carbon
Reports submitted to the Carbon Disclosure Project (CDP) reveal that the most common motives behind internal carbon pricing initiatives include:

  • Investor relations
  • Cost savings opportunities provided by reducing emissions
  • Perceived business risks associated with climate change, such as severe weather or supply chain interference
  • Regulatory risk

Companies have responded to these motives by creating internal pricing systems to help them account for the future carbon costs they expect to face. Those systems are outlined in this report, along with various measures of pricing reported by the companies.

Why it matters
This research provides useful insight into how U.S. companies are responding to a growing body of climate research and public pressures related to climate change. The analysis should be of particular interest to both private business stakeholders and public policymakers as it documents how private initiatives are advancing a commitment to CO2-induced climate change mitigation in the face of an uncertain public policy landscape.

Project Authors
Hayden Hubbard

CGO Undergraduate Research Fellow

McKlayne Marshall

CGO Undergraduate Research Fellow

Christopher Cottle

CGO Undergraduate Research Fellow

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