Yale will become one of the first institutions in higher education to implement a price on its carbon emissions.

In its 36-page report released Monday afternoon, the Presidential Carbon Charge Task Force recommended that Yale adopt an internal fee on the carbon dioxide emissions of University “units,” which include athletic facilities, academic departments, administrative offices and residential colleges. Under the committee’s proposal, each unit would be assessed on their “net emissions,” which is the difference of their actual emissions in the year over their adjusted base emissions rate during the previous three-year period. As a result, facilities and departments whose emissions grew faster than the University average across these units would incur a charge, while units with slower emission growth would receive a rebate.

“We look forward to piloting this concept in select units in the future, and to continued careful research and study as we consider potential wider implementation,” University President Peter Salovey wrote in the announcement. “We believe that this proposal can serve as a model for other institutions, expanding Yale’s role as a pioneer in researching, teaching, and designing innovative solutions to climate change.”

Economics professor William Nordhaus ’63, who chaired the task force, stressed that the carbon charge should not be viewed as a “tax” or a way for the central administration to raise money.

The task force recommended that the charge be phased in within three years beginning in the 2015–16 academic year. The period will allow the University to test the recommendations, make actual calculations of carbon emissions, and initiate the budget charges for selected units. However, in his announcement, Salovey did not explicitly agree to a University-wide implementation within that timeframe.

The report recommended the exact price of the charge for 2015 to be set at $40 per ton of carbon dioxide, the social cost of carbon emissions estimated by the federal government and used in federal legislation. With Yale emitting — directly or indirectly — roughly 300,000 metric tons of carbon dioxide per year, the total carbon-charge revenues would be approximately $12 million per year for the university, the report stated.

In an email to the News, Salovey said that he was interested in Yale becoming a “test case” for this carbon charge, which can then be studied to see how well such financial incentives work in changing behavior. The pilot will also allow the University to consider the challenges in implementing such a program.

The report recommended the internal carbon pricing scheme be a “revenue neutral” charge, meaning the sum of all carbon charges across units total to zero, with no revenue directed towards the central administration. Still, some details — such as how to best divide the University’s 365 buildings into corresponding units — remain to be worked out.

“The carbon-charge program is designed to ensure that the University’s policies regarding climate change as well as its energy use are the concerns of more people and entities around the campus,” the report stated. “The appeal of carbon prices is that, under the proposal, they [can] apply universally, in a decentralized and market-based fashion, whereas regulations apply selectively to a limited number of sectors.”

Nordhaus said each unit would “start at zero,” meaning it would not receive a charge at the time of the program’s implementation. Instead, units would be rewarded or penalized depending on whether they reduced or increased their carbon emissions. 

“It is not whether you are carbon intensive or carbon light, it is whether you increase it or decrease it,” he said.

He added that implementing this charge demonstrates Yale’s commitment to take its general environmental goals and “make them real” for all parts of the organization.

Still, there remain some structural hurdles that may make implementing the carbon charge more difficult in practice.

One problem the report identified is that few administrative units actually see their own energy bills and may not fully understand the cost consequences of their energy usage. Additionally, decentralizing the energy budget for these units would require large budget reform that may be difficult in a short period of time.

“The carbon-charge program seems an inappropriate lever to use to impose budget reforms,” the report stated. “In any case, budget reforms on a large-scale basis are unrealistic in the next year or two.”

Further, the report noted that some units, such as residential colleges and Faculty of Arts and Sciences departments, present unique challenges for estimating carbon emissions and assigning a carbon charge since they may have limited budget authority or are co-located with other units.

Nordhaus said this “phase-in” period will therefore allow the University to work out the details as it takes the new idea from the blueprint stage and integrate it into reality.

In addition, the task force recommended the University add a new full-time professional position — designated as the director of the Carbon Charge Program — who would be responsible for such tasks as implementing the pilot, providing definitive boundaries for the charge, calculating emissions and working directly with units to manage their carbon footprint.

Finally, the report urged that the carbon charge pilot be reviewed in its fifth year to determine whether it has helped reduce emissions and decreased the carbon footprint of the University.

Looking forward, law professor Dan Esty LAW ’86, a member of the task force, said the implementation of this carbon charge would not only have impact on Yale, but will set an example for others as well.

“I think it is very exciting to have Yale stepping out in front not only in the University community, but really with regards to climate policy across the country,” Esty said. “This is an attempt to make a carbon charge work and to demonstrate how that policy approach may be applied more generally.”

This article has been updated to reflect the version published in print on April 21, 2015.