In 2024, Second Nature conducted in-depth research to answer a big question for colleges and universities: what should the cost of carbon be for the higher education sector?
The result? A recommended carbon price range designed to help schools accelerate climate action, whether or not they have the capacity to calculate this on their own.
Why Price Carbon?
Putting a price on carbon is one of the most powerful tools schools can use to drive climate solutions. It helps institutions understand the full impact of their emissions and make better financial and environmental decisions.
There are two main ways institutions approach internal carbon pricing:
- Carbon Tax Model – Charges a fee per ton of emissions to fund climate solutions.
- Proxy Model – Assigns a dollar value to the broader damage caused by emissions (like health impacts and extreme weather) and factors this cost into decision making. Proxy models usually support higher prices in line with the true social cost of carbon.
Second Nature explored both approaches, reviewing models from the EPA, UC system, Swarthmore, New York State, and others. We also consulted with experts and campus leaders through our Carbon Pricing Working Group.
Two Recommendations for Colleges and Universities (2025–2035)
Second Nature recommends two sector-specific
prices for internal use:
1. Carbon Tax Price
$50–$100/ton, with an annual increase of
3% + inflation
Use this if you’re charging your institution for emissions and reinvesting in mitigation or offsets.
2. Proxy Carbon Price
$210–$248/ton, with an annual increase of
3% + inflation
Use this as a decision-making tool to reflect the true societal cost of emissions—no money changes hands, but climate impacts are accounted for.
Why These Prices?
The carbon tax price is grounded in federal estimates and offsets costs, designed to be actionable for schools of all sizes. It encourages schools to reinvest in their decarbonization work instead of buying offsets.
The proxy price reflects the real impact of one ton of carbon on society. It’s based on the EPA’s social cost of carbon and helps schools make climate-smart decisions when evaluating construction, investments, or policies.Both prices include a 3% marginal damages escalator, plus inflation, to keep up with growing climate risks and rising costs over time.
Looking Ahead: Turning Costs into Contributions
Second Nature is seeking funding to work with SIMAP to provide a way for schools to report financial contributions to climate justice or mitigation efforts as part of their climate action strategies, which are in line with the social cost of carbon. These contributions, which are not claimed as offsets against a campus’ carbon footprint, will add meaningful transparency and accountability to higher education’s climate leadership.
Want to Learn More?
Second Nature’s full guidance on Sector Social Cost of Carbon 2025-2035 and Carbon Markets & Offsets is available now, supporting the upcoming Commitments 3.0 update. Dive deeper into the research behind these prices in the resources section.
