IDEAS home Printed from https://ideas.repec.org/a/eee/rensus/v154y2022ics1364032121010170.html
   My bibliography  Save this article

Review of internal carbon pricing and the development of a decision process for the identification of promising Internal Pricing Methods for an Organisation

Author

Listed:
  • Gorbach, O.G.
  • Kost, C.
  • Pickett, C.

Abstract

Increasing demand by the public and shareholders for substantial actions against the climate crisis is forcing organisations of all sectors to manage their greenhouse gas emissions more effectively. One method for organisations to reduce their emissions is Internal Carbon Pricing (ICP). So far, a comprehensive overview on ICP, especially on the impacts and barriers to its implementation, is missing. This paper closes the knowledge gap by summarising the motives for organisations to use ICP, by discussing the different ICP methods and by describing their impacts as well as identifying key implementation barriers. The work condenses the findings into a flow chart for easy identification of promising ICP methods while accounting for implementation barriers. The discussed ICP methods are emissions trading systems, proxy prices, carbon fees and hybrid systems. The review also discusses ICP methods which are not that common such as revenue-neutral carbon fees. The developed flow chart underlines two common barriers for implementing ICP. These are, 1) frequent difficulty allocating emissions to the responsible cost center within an organisation; 2) the challenge cost centers face reacting to the ICP by changing processes, technologies or products. Nevertheless, the results underline a variety of methods that allow the effective use of ICP under different organisation-specific circumstances. The literature review also emphasises the need for more in-depth case studies on the implementation of ICP within organisations.

Suggested Citation

  • Gorbach, O.G. & Kost, C. & Pickett, C., 2022. "Review of internal carbon pricing and the development of a decision process for the identification of promising Internal Pricing Methods for an Organisation," Renewable and Sustainable Energy Reviews, Elsevier, vol. 154(C).
    • Handle: RePEc:eee:rensus:v:154:y:2022:i:c:s1364032121010170
    DOI: 10.1016/j.rser.2021.111745
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1364032121010170
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.rser.2021.111745?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Joeri Rogelj & Daniel Huppmann & Volker Krey & Keywan Riahi & Leon Clarke & Matthew Gidden & Zebedee Nicholls & Malte Meinshausen, 2019. "A new scenario logic for the Paris Agreement long-term temperature goal," Nature, Nature, vol. 573(7774), pages 357-363, September.
    2. Wayne B. Gray & Gilbert E. Metcalf, 2017. "Carbon Tax Competitiveness Concerns: Assessing a Best Practices Carbon Credit," National Tax Journal, National Tax Association;National Tax Journal, vol. 70(2), pages 447-468, June.
    3. Dechezlepretre, Antoine & Sato, Misato, 2017. "The impacts of environmental regulations on competitiveness," LSE Research Online Documents on Economics 77700, London School of Economics and Political Science, LSE Library.
    4. Antoine Dechezleprêtre & Misato Sato, 2017. "The Impacts of Environmental Regulations on Competitiveness," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(2), pages 183-206.
    5. Sorrell, Steve, 2007. "Improving the evidence base for energy policy: The role of systematic reviews," Energy Policy, Elsevier, vol. 35(3), pages 1858-1871, March.
    6. Victor, David G. & House, Joshua C., 2006. "BP's emissions trading system," Energy Policy, Elsevier, vol. 34(15), pages 2100-2112, October.
    7. Akhurst, Mark & Morgheim, Jeff & Lewis, Rachel, 2003. "Greenhouse gas emissions trading in BP," Energy Policy, Elsevier, vol. 31(7), pages 657-663, June.
    8. Hafstead, Marc & Metcalf, Gilbert E. & Williams III, Roberton C., 2016. "Adding Quantity Certainty to a Carbon Tax: The Role of a Tax Adjustment Mechanism for Policy Pre-Commitment," RFF Working Paper Series dp-16-43, Resources for the Future.
    9. Bento, Nuno & Gianfrate, Gianfranco, 2020. "Determinants of internal carbon pricing," Energy Policy, Elsevier, vol. 143(C).
    10. Carl-Friedrich Schleussner & Joeri Rogelj & Michiel Schaeffer & Tabea Lissner & Rachel Licker & Erich M. Fischer & Reto Knutti & Anders Levermann & Katja Frieler & William Hare, 2016. "Science and policy characteristics of the Paris Agreement temperature goal," Nature Climate Change, Nature, vol. 6(9), pages 827-835, September.
    11. Philip J. Heptonstall & Robert J. K. Gross, 2021. "A systematic review of the costs and impacts of integrating variable renewables into power grids," Nature Energy, Nature, vol. 6(1), pages 72-83, January.
    12. Kenneth Gillingham & Stefano Carattini & Daniel Esty, 2017. "Lessons from first campus carbon-pricing scheme," Nature, Nature, vol. 551(7678), pages 27-29, November.
    13. Iordanis M. Eleftheriadis & Evgenia G. Anagnostopoulou, 2015. "Relationship between Corporate Climate Change Disclosures and Firm Factors," Business Strategy and the Environment, Wiley Blackwell, vol. 24(8), pages 780-789, December.
    14. Matthias Damert & Rupert J. Baumgartner, 2018. "Intra‐Sectoral Differences in Climate Change Strategies: Evidence from the Global Automotive Industry," Business Strategy and the Environment, Wiley Blackwell, vol. 27(3), pages 265-281, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hechelmann, Ron-Hendrik & Paris, Aaron & Buchenau, Nadja & Ebersold, Felix, 2023. "Decarbonisation strategies for manufacturing: A technical and economic comparison," Renewable and Sustainable Energy Reviews, Elsevier, vol. 188(C).
    2. Trinks, Arjan & Mulder, Machiel & Scholtens, Bert, 2022. "External carbon costs and internal carbon pricing," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    3. Katarzyna Piwowar-Sulej & Mariusz Sołtysik & Szymon Jarosz & Ryszard Pukała, 2023. "The Linkage between Renewable Energy and Project Management: What Do We Already Know, and What Are the Future Directions of Research?," Energies, MDPI, vol. 16(12), pages 1-26, June.
    4. Yue, Xianghua & Peng, Michael Yao-Ping & Anser, Muhammad Khalid & Nassani, Abdelmohsen A. & Haffar, Mohamed & Zaman, Khalid, 2022. "The role of carbon taxes, clean fuels, and renewable energy in promoting sustainable development: How green is nuclear energy?," Renewable Energy, Elsevier, vol. 193(C), pages 167-178.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Oliver Gregor Gorbach & Noha Saad Hussein & Jessica Thomsen, 2021. "Impact of Internal Carbon Prices on the Energy System of an Organisation’s Facilities in Germany, Japan and the United Kingdom Compared to Potential External Carbon Prices," Energies, MDPI, vol. 14(14), pages 1-41, July.
    2. Michael Keen & Ian Parry & James Roaf, 2022. "Border carbon adjustments: rationale, design and impact," Fiscal Studies, John Wiley & Sons, vol. 43(3), pages 209-234, September.
    3. Rafaty, R. & Dolphin, G. & Pretis, F., 2020. "Carbon pricing and the elasticity of CO2 emissions," Cambridge Working Papers in Economics 20116, Faculty of Economics, University of Cambridge.
    4. Oliver Gregor Gorbach & Jessica Thomsen, 2022. "Comparing the Energy System of a Facility with Uncertainty about Future Internal Carbon Prices and Energy Carrier Costs Using Deterministic Optimisation and Two-Stage Stochastic Programming," Energies, MDPI, vol. 15(10), pages 1-39, May.
    5. Hille, Erik & Althammer, Wilhelm & Diederich, Henning, 2020. "Environmental regulation and innovation in renewable energy technologies: Does the policy instrument matter?," Technological Forecasting and Social Change, Elsevier, vol. 153(C).
    6. Yue, Shen & Munir, Irfan Ullah & Hyder, Shabir & Nassani, Abdelmohsen A. & Qazi Abro, Muhammad Moinuddin & Zaman, Khalid, 2020. "Sustainable food production, forest biodiversity and mineral pricing: Interconnected global issues," Resources Policy, Elsevier, vol. 65(C).
    7. Ulrich Witt & Christian Gross, 2020. "The rise of the “service economy” in the second half of the twentieth century and its energetic contingencies," Journal of Evolutionary Economics, Springer, vol. 30(2), pages 231-246, April.
    8. Li, Weiping & Chen, Xiaoqi & Huang, Jiashun & Gong, Xu & Wu, Wei, 2022. "Do environmental regulations affect firm's cash holdings? Evidence from a quasi-natural experiment," Energy Economics, Elsevier, vol. 112(C).
    9. Bongsuk Sung & Myoung Shik Choi & Woo-Yong Song, 2019. "Exploring the Effects of Government Policies on Economic Performance: Evidence Using Panel Data for Korean Renewable Energy Technology Firms," Sustainability, MDPI, vol. 11(8), pages 1-19, April.
    10. Niu, Tong & Yao, Xilong & Shao, Shuai & Li, Ding & Wang, Wenxi, 2018. "Environmental tax shocks and carbon emissions: An estimated DSGE model," Structural Change and Economic Dynamics, Elsevier, vol. 47(C), pages 9-17.
    11. Durán-Romero, Gemma & López, Ana M. & Beliaeva, Tatiana & Ferasso, Marcos & Garonne, Christophe & Jones, Paul, 2020. "Bridging the gap between circular economy and climate change mitigation policies through eco-innovations and Quintuple Helix Model," Technological Forecasting and Social Change, Elsevier, vol. 160(C).
    12. Ren, Shenggang & Hu, Yucai & Zheng, Jingjing & Wang, Yangjie, 2020. "Emissions trading and firm innovation: Evidence from a natural experiment in China," Technological Forecasting and Social Change, Elsevier, vol. 155(C).
    13. Jintao Zhang & Zhen Yang & Li Meng & Lu Han, 2022. "Environmental regulations and enterprises innovation performance: the role of R&D investments and political connections," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(3), pages 4088-4109, March.
    14. Stuart Evans & Michael A. Mehling & Robert A. Ritz & Paul Sammon, 2021. "Border carbon adjustments and industrial competitiveness in a European Green Deal," Climate Policy, Taylor & Francis Journals, vol. 21(3), pages 307-317, March.
    15. Marin, Giovanni & Vona, Francesco, 2019. "Climate policies and skill-biased employment dynamics: Evidence from EU countries," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    16. Marin, Giovanni & Vona, Francesco, 2023. "Finance and the reallocation of scientific, engineering and mathematical talent," Research Policy, Elsevier, vol. 52(5).
    17. Maria Crescimanno & Claudio Mirabella & Valeria Borsellino & Emanuele Schimmenti & Demetris Vrontis & Salvatore Tinervia & Antonino Galati, 2023. "How Organizational Resources and Managerial Features Affect Business Performance: An Analysis in the Greek Wine Industry," Sustainability, MDPI, vol. 15(4), pages 1-14, February.
    18. Themann, Michael & Koch, Nicolas, 2021. "Catching up and falling behind: Cross-country evidence on the impact of the EU ETS on firm productivity," Ruhr Economic Papers 904, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    19. repec:hal:spmain:info:hdl:2441/6d7es28iae9pjoil7092hs41h3 is not listed on IDEAS
    20. Yuping Deng & Yanrui Wu & Helian Xu, 2019. "Environmental Regulation and Export Product Quality: Evidence from Chinese Firms," Economics Discussion / Working Papers 19-14, The University of Western Australia, Department of Economics.
    21. Michael Gmeiner & Robert Gmeiner, 2022. "Regulation Enforcement," Journal of Labor Research, Springer, vol. 43(2), pages 163-202, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:rensus:v:154:y:2022:i:c:s1364032121010170. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.