Putting value on carbon can lower energy use, campus experiment shows

More than 600 major companies — from BP to Microsoft — have adopted carbon-pricing programs to spur energy conservation and control their carbon emissions. But the effectiveness of these efforts has not been analyzed or publicly reported.

An article published in the journal Nature on Nov. 2 provides new insights into the value of carbon-pricing incentives based on analysis of a pilot program at Yale University in 2015. The researchers highlight some of the ingredients needed to achieve successful carbon-pricing schemes.

In the paper, three Yale researchers provide an overview of internal carbon pricing strategies, including an examination of different models of implementation. Further, they illustrate how the Yale project, which has since been expanded into a campus-wide initiative, has provided empirical evidence of the effectiveness of utilizing such price signals.

“What we found is that carbon pricing can be a valuable tool to help reduce emissions, especially at a time when there is little activity to reduce emissions at the national level,” said Kenneth Gillingham, a professor of economics at the Yale School of Forestry & Environmental Studies (F&ES) and lead author of the paper.

The co-authors are Stefano Carattini, a postdoctoral fellow at F&ES, and Daniel Esty, a professor of environmental law and policy at F&ES and Yale Law School...