To help meet campus emissions targets, a revamped Yale Carbon Charge

In 2017, Yale launched a first-of-its kind program to explore the effectiveness of putting a price tag on carbon emissions — and it used the university campus as a laboratory.

To encourage energy-saving policies and behaviors on campus, the Yale Carbon Charge levied a charge on units that achieved lower carbon emissions reductions than their campus peers and provided funds to units that had greater emissions reductions.

The Yale Carbon Charge program led to significant energy reductions: some units consolidated operations to improve energy efficiency, others invested in cleaner technologies. By relaxing thermostat settings by 1 degree Fahrenheit in its 29 buildings, for example, the School of Medicine consumed less energy — and saved more than $1 million in utility costs annually.

The program also yielded important insights into the feasibility of internal carbon pricing.

Now, university leaders have decided the existential threat of climate change demands an even more ambitious approach to carbon emissions reductions. As part of Yale’s intensified commitment to generate zero carbon emissions by 2050, announced last year, the university this summer introduced a revamped Yale Carbon Charge.

Developed by university leaders in consultation with faculty experts and operational staff, the new model calls for all top-level units on campus — Yale’s constituent schools, for example — to contribute to a university fund that will support the conversion of the campus to clean energy sources. Unit contributions will be based on each metric ton of carbon dioxide equivalent produced by their buildings. (Different greenhouse gases have different global warming effects; for consistency, scientists convert the amounts of various gases to their CO2 equivalent.)

These charges will help support Yale’s campus-wide efforts to meet its goal of zero carbon emissions by midcentury.

“The Carbon Charge will no longer be focused solely on providing incentives for individual units and buildings to reduce emissions,” said Carbon Charge director Casey Pickett. “It will also be focused on generating funding for major decarbonization projects that will benefit the entire campus.”

The cost for campus units will be $20 per metric ton during fiscal year 2023, rising to $35 per metric ton in FY24 and $50 per metric ton in FY24, which is the federal government’s current estimate of the “social cost of carbon,” or the damage caused by emitting one additional ton of carbon dioxide into the atmosphere.

When university leaders announced new and more ambitious campus climate goals last year, they said strategies to reduce emissions would be rooted in research taking place across the university. And the Yale Carbon Charge — which from the beginning has used the campus as a laboratory for sustainability practices and behaviors — will remain a key part of Yale’s efforts.

“Our goal at Yale is zero operational emissions by 2050,” said Provost Scott Strobel. “The Yale Carbon Charge is essential in meeting that target. It allows us to model different fee structures on our own emissions and clearly understand their impact. We began with a revenue-neutral fee system and are now transitioning to a model that supports our 2050 commitment.”

The campus as laboratory

The original Yale Carbon Charge project emerged during a 2014 Earth Day event at the Yale School of the Environment. During a panel discussion, when asked about Yale’s role in reducing carbon emissions, Sterling Professor of Economics and Nobel Laureate William Nordhaus offered a suggestion: “Yale could implement an internal carbon tax,” he said.

The idea quickly gained traction. By the fall, President Salovey had appointed a task force, chaired by Nordhaus, to examine whether an internal carbon tax — which charges a fee to units within an organization for each ton of carbon emissions — would be a feasible and effective tool for promoting sustainability. In April 2015, Salovey announced Yale would move ahead with a pilot project exploring different carbon pricing options.

In 2017, after two years of planning and a pilot study, the Yale Carbon Charge went live campuswide. The model was revenue neutral: units that reduced emissions less than the campus average paid into the system and units that reduced emissions more than average received funds from the system. These amounts netted to zero.

“The Yale Carbon Charge is a great example of how we have used Yale's campus as a living laboratory to test faculty research in real time and, in the process, learn from the challenges and opportunities presented,” said Virginia Chapman, director of Yale’s Office of Sustainability. “The program allowed our students, faculty, and staff to conduct research projects and experiment with behavior change communications. The program’s adaptations over time demonstrate how applied research and active learning can enhance sustainability efforts at Yale and beyond.”

The original Carbon Charge model prompted noteworthy efforts to reduce emissions in several buildings across campus.

Across the university, operational planners began tracking more closely how energy was being used in their buildings at various times of day, and how they could cut back. On Yale’s West Campus, planners looking for ways to cut energy costs consolidated the Yale Energy Sciences Institute into a single building, drastically reducing energy needs. Yale School of the Environment decided to invest in a more expensive — yet more efficient — boiler to reduce total costs in the long-term.  At the Yale School of Management, operations planners began turning off the 80-square-foot digital screen in its café — which highlights business news and menu items — earlier in the evening to reduce electricity use.

“These are the kinds of things we hoped the Carbon Charge would do,” said Tanya Wiedeking, programming and public education advisor for the Carbon Charge. “The point is to encourage staff at all levels to find ways to save energy.”

In pursuing this goal, however, the project also encountered challenges. Some units found that the potential benefits simply weren’t large enough to rationalize taking the significant steps necessary to meaningfully reduce carbon emissions. And although designers of the program created a model to treat all units with fairness, the complexity of addressing the needs of very different units — who had implemented emissions reduction strategies at different periods in recent history — presented obstacles.

It also became apparent that it was often difficult for some individual units to respond to emissions-reduction incentives: Even if they were able to identify worthwhile strategies for improving energy efficiency or investing in new technologies, they often lacked the resources or capacity to make the changes on their own.

Ultimately, university leaders concluded that the carbon charge would have greater impact by focusing on centralized decisions about how the university should power campus and distribute energy.

In the beginning, Pickett said, the Yale Carbon Charge was not created specifically to reduce emissions on campus; it was created to answer important questions. Is it feasible to implement an internal carbon price with a revenue neutral model within a large and complex organization? Would it be feasible administratively? And could it have a major impact on emissions?

The answer to the first two questions was yes. As for the third, Yale learned that another approach is necessary to make progress at the necessary scale.

Learning such lessons was exactly the point, said Brad Gentry, senior associate dean of professional practice and the Frederick K. Weyerhaeuser Professor at Yale School of the Environment and Yale School of Management, who also served on the Presidential Carbon Charge Task Force, created by President Salovey to examine the effectiveness and feasibility of carbon pricing.

“By applying the theory to our own institution, we now know much more about how carbon pricing works in practice and, based on feedback from around the institution, we have revised our policy in response,” he said.

A new model

Just like the old model, the new Carbon Charge fee will be based on data from energy meters installed in campus buildings. Each quarter, the university will calculate the amount of energy used by the buildings — for electricity, heating, and cooling, etc. — and charge their operating units per metric ton of carbon dioxide emissions equivalent.

“The new model is simpler than the original,” Pickett said. “Now, all the funds will go directly to helping Yale shift off of fossil fuels.”

In short, all units will be paying into future improvements and efficiencies across campus, including construction and renovation projects that equip buildings to be powered by renewable energy resources.

It is estimated that the carbon charge will meet about 10% of the expected $1.58 billion that will be needed to meet the 2050 zero carbon goal. The rest will be covered through changes to the capital budget and loans.

As part of the new carbon charge policy, the university also will adopt a so-called “proxy carbon price.” This internalizes the costs of emitting one metric ton of carbon dioxide equivalent by adding that cost to capital planning projections, guiding future capital investments. This will allow planners and decisionmakers to determine how much a new building, renovation, or piece of equipment would cost if its price included the cost of its anticipated carbon emissions.

In addition to promoting sustainability at Yale, the Carbon Charge program can also help inform climate policies elsewhere.

“By designing the project as a platform for applied research and education, hundreds of organizations around the world have been able to learn about carbon pricing from our internal carbon pricing toolkit and our Pricing Nature podcast,” Pickett said. “The redesigned carbon charge policy holds in store for us more lessons in how to wring fossil fuels out of our energy systems.”