One Carbon Fee Program to Rule them All

Practical carbon pricing models are materializing in unexpected places.
Aug 15, 2014 2:00 PM ET

In our ever-evolving global economy, it’s becoming crystal clear that only the countries and companies that successfully merge sustainability with profitability will succeed in a resource constrained world. In the future, if organizations and governments divorce sustainability from financial growth, they’ll simply put themselves out of business.

Fortunately, businesses and administrations around the world are devising creative strategies to address their specific environmental impact. Amidst all of the activity, an emerging solution is gaining in palatability and viability across the board—appropriately pricing carbon.

While there are still plenty of skeptics that question the feasibility and effectiveness of carbon pricing, carbon programs are popping up around the globe.   The most commonly accepted approaches include mandates (which require businesses and individuals to meet certain efficiency standards or utilize specific renewable energy sources) and tax incentives (which generally include accelerated depreciation, credits, or exemptions for the purchase of items such as hybrid cars, renewable energy systems, and energy efficient products.)

Other schemes are more controversial, such as cap-and-trade programs, which set limits on the total amount of emissions allowed in a particular jurisdiction, and then enable emitters to trade or sell their surplus to others. While the efficacy (and ethicality) of cap-and-trade systems is still under scrutiny, they do allow emitters the flexibility to minimize costs either through direct compliance or by paying others to do so.

Perhaps the most heated debate in the US is around a straight carbon tax, which is applied to all greenhouse gasses in an effort to control and mitigate the effects of climate change. Carbon tax enthusiasts emphasize the ease of administration and predicable costs of this approach. Critics are dubious about the effectiveness of carbon taxes on emission reductions relative to the financial burden.

But practical carbon pricing models are materializing in unexpected places. Perhaps the most noteworthy program—and certainly the most globally distributed one—doesn’t come from a progressive city like Vancouver or San Francisco, or even from a company that has its roots in sustainability like Whole Foods or The Body Shop, but rather from technology giant Microsoft.

I recently spoke with Tamara “TJ” DiCaprio, Senior Director of Environmental Sustainability for Microsoft, the mastermind behind the company’s carbon neutrality policy and carbon fee program, about their model. TJ’s enthusiasm was infectious right from the start. Her authentic passion for fusing sustainability into corporate performance to create a virtuous cycle of creativity and innovation was refreshing.