What is internal carbon pricing?

Using internal carbon pricing means that an organisation places a monetary value on emissions from business travel. When travelling by fossil fuel-intensive vehicles like aeroplanes and cars, the organisation pays a so-called internal carbon fee. The fee can then be used to invest in more climate-friendly practices, such as travel by train, bicycle or electric car, or purchase of equipment for video meetings.

In summary, internal carbon pricing can be seen as an instrument for financial control – something that can help you with your green transformation process in a concrete way. It has a two-way effect: it makes it more expensive to emit carbon, and creates a budget for activities that support more sustainable alternatives.

Internal carbon pricing can be used in many ways, but here we focus on travel.

How does internal carbon pricing differ from carbon offsetting?

In short: the money stays within your organisation. Carbon offsetting means that an organisation’s emissions are compensated by activities carried out by someone else. With internal carbon pricing, you actively work to reduce your own emissions and use the internal carbon fee to fund actions performed by your organisation.

Summary of benefits

• Reduced carbon emissions and reduced costs
• The money is re-invested in your own organisation and used to take climate-friendly action
• Good for employee health – riding a bike is healthier than going by car
• A boost for your brand – you show you are willing to act to reduce environmental impact

Organisations that have implemented internal carbon pricing have reduced their emissions and costs by 10-50 percent. And that was before the pandemic.

How to get started

For a successful implementation, make sure you have support from relevant decision-makers and that you have the resources and key persons to manage the process. Analyse your current travel emissions and costs. Where does it make sense to introduce an internal carbon fee, and where should you take action? Adapt your actions to your own organisation. Communicate, follow up and evaluate continuously. And remember to keep it simple – both in communication and from an administrative perspective.

Further reading

We are here to help! Check out Klimatväxling i Skåne for more information and hands-on tips. You’ll also find a number of useful tools (in Swedish only) available for download.

Klimatväxling (skane.se)

This project is run by Region Skåne between 2018 and 2022. It is co-financed by the European Regional Development Fund (ERDF).