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Colleges and universities contribute to climate change and can be leaders in preventing its worst impacts. This effort takes a variety of forms, including commitments to achieve decarbonization and resilience, faculty research on climate science and solutions, and the preparation of students to transition to a low carbon economy. One particularly promising avenue for advancing climate change solutions within any of these approaches is to price carbon on campus. Internal Carbon pricing improves the competitiveness of zero- and low-carbon options, provides financing for decarbonization, and can advance entities on the path to true mitigation.
Momentum for carbon pricing is building globally: as of 2025, 99 nations or subnational jurisdictions price carbon via various pricing instruments.[1] A survey across 20 countries showed majority support for global carbon price [2] and a global survey by Oxfam showed that 81% of people support a carbon tax on fossil fuel companies. [3] Many economists identify a carbon price as the most efficient way to meet climate targets.[4] In the private sector, over 2000 companies currently use an internal carbon price of some kind.[5] While corporations may be limited in the details they can share about their internal carbon pricing systems, institutions of higher education can experiment openly, sharing the details and results of their programs and supporting research to inform future policy.
As trusted figures with a wide public reach, colleges and universities have a distinct opportunity to develop and share a stronger understanding of carbon pricing systems. Schools can support related faculty research, facilitate community education, and endorse a price on carbon, among other actions. In this context, higher education is the ideal institution for experimenting with carbon pricing solutions. It is a place to advance both research and educational goals on the issue while helping colleges and universities reach emission reduction goals, prepare for external carbon prices, and reduce utility costs. And even though institutions of higher education may target disparate objectives, internal carbon pricing is flexible enough to reflect this variation.
Limited resources make it difficult to fund emissions reduction measures. An internal price can clarify when emissions reduction projects are worth the financial investment.
A carbon price can encourage decision-makers at all levels to reduce emissions cost-efficiently and support schools’ climate targets.
Internal carbon pricing can provide a price signal that highlights hidden energy loads and incents energy efficient measures.
Internal carbon levies can provide a revenue stream to support climate-related projects on campus.
A price can provide a platform for education and engagement about the climate crisis and potential solutions.
Faculty and student research on institutional carbon pricing systems can advance climate policy and inform local, state, and national policy design.
Higher education can contribute foundational knowledge and momentum to larger scale policy solutions—those at the state or national level.
It is highly probable that schools will be subject to state or national carbon prices before the decommissioning of buildings that are constructed today. An internal price can ensure that decisions today are optimized for operation under an external price.
Presents a recommended social cost of carbon for proxy carbon pricing, and a carbon tax for the higher education sector, based on the latest research.
Briefly articulates the core goals and mission statements of four internal carbon pricing programs in higher education.
Short (8 minute) video of Alex Barron, Assistant Professor of Environmental Science and Policy, presenting on the broader context for internal carbon pricing in higher education.
Smith College and Princeton University, 2020
Published in Elementa: Science of the Anthropocene.
[1] World Bank, “State and Trends of Carbon Pricing Dashboard,” July 2025, World Bank, https://carbonpricingdashboard.worldbank.org/
[2] Fabre, A., Douenne, T. & Mattauch, L. Majority support for global redistributive and climate policies. Nat Hum Behav (2025). https://doi.org/10.1038/s41562-025-02175-9
[3] Global survey finds 8 out of 10 people support taxing oil and gas companies to pay for climate damages, Oxfam 2025 https://www.oxfamamerica.org/press/global-survey-finds-8-out-of-10-people-support-taxing-oil-and-gas-companies-to-pay-for-climate-damages/
[4] Thomas Sterner, Jens Ewald, Erik Sterner, Economists and the climate, Journal of Behavioral and Experimental Economics, Volume 109, 2024, 102158, ISSN 2214-8043, https://doi.org/10.1016/j.socec.2023.102158.
(https://www.sciencedirect.com/science/article/pii/S2214804323001842)
[5] Nearly Half of World’s Biggest Companies Factoring Cost of Carbon into Business Plans CDP, 2021 https://www.cdp.net/en/insights/nearly-half-of-worlds-biggest-companies-factoring-cost-of-carbon-into-business-plans
[6] The term “external price” refers to a price set by a governmental entity within its jurisdiction. Such policies require external payments from an organization. Many northeastern institutions, for instance, operate within the jurisdiction of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade system among northeast and mid-Atlantic States, and the California campus systems emitting above a certain threshold are required to participate in the California Air Resources Board cap and trade system.
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