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Introducing Milkywire's Updated White Paper on Internal Carbon Fees

Milkywire releases the latest edition of the white paper, Guidance on setting an internal carbon fee, providing explanations, guidance and examples for companies.

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Robert Höglund

May 21, 2024

2 min read

Updated about 2 months ago

Milkywire releases the latest edition of the white paper, Guidance on setting an internal carbon fee, providing explanations, guidance and examples for companies. 

Read the white paper here.

Understanding internal carbon fees

Our white paper distinguishes between internal carbon pricing and internal carbon fees. While internal carbon pricing is used to evaluate potential financial impacts from carbon costs, an internal carbon fee is more proactive, allowing companies to self-impose charges for their emissions. This approach creates a dedicated fund for external climate projects or enhances internal sustainability initiatives.

Four-Step framework for climate action

Supported by frameworks like SBTi, WWF/BCG, and Gold Standard/Milkywire, the white paper lays out a clear four-step process for credible climate action:

  1. Account and Reduce Emissions: Companies are encouraged to measure and reduce their direct and indirect emissions in line with science-based targets.

  2. Set an Internal Carbon Fee: This involves implementing a fee for each ton of CO2 emissions, motivating reductions and financing environmental efforts.

  3. Fund Quality Climate Projects: Utilizing the funds generated to support impactful initiatives that advance global net-zero ambitions.

  4. Report and Make Credible Claims: Ensuring transparency in reporting climate efforts and the actual impacts of these initiatives.

Moving beyond offsetting

In line with these frameworks, we advocate moving from traditional carbon offsetting to the establishment of internal carbon fees. This strategic shift enables companies to not just claim neutrality but to actively contribute towards global net-zero goals, financing projects that have a tangible impact on the environment.

Examples of success in implementing carbon fees

Corporations such as Klarna, Microsoft, and Swiss Re have successfully applied internal carbon fees, demonstrating how these strategies can effectively reduce emissions and support significant climate projects. These examples illustrate the potential of internal carbon fees to make a substantial difference across various industries.

Considering sectoral differences

The white paper recommends adjusting the carbon fee based on each company's specific emission intensity and profitability. This ensures that companies at different stages of their environmental journey can set realistic and impactful fees, aligning their corporate strategies with their environmental responsibilities.

Encouraging corporate engagement in climate action

Milkywire is committed to guiding companies through the process of adopting internal carbon fees to fulfil their environmental duties while leading in sustainable business practices. We encourage all interested companies to engage with our white paper to explore how to implement these strategies effectively.

By leveraging internal carbon fees, companies can take a proactive role in mitigating climate change. Milkywire is ready to support businesses in every step from assessment to the successful implementation of an internal carbon fee system. Let’s work together to make a credible impact.

Webinar: Guidance for setting internal carbon fees

On Tuesday 7th May 2024, we hosted a webinar explaining how and why companies should set internal carbon fees. In the session, we discussed how internal carbon fees are a best practice approach to take responsibility for your emissions, that both de-risks and simplifies a beyond value chain mitigation strategy. Our speakers covered a range of topics from setting a credible fee to understanding how you communicate its implementation.

Watch the recording here.

About the author(s)
robert picture
Robert HöglundCTF Manager

robert.hoglund@milkywire.com

Robert Höglund is a carbon dioxide removal (CDR) and climate policy expert. In addition to managing the Climate Transformation Fund, he co-founded the CDR market overview CDR.fyi, works with the NGO Carbon Gap, and publishes reports and articles on carbon removal and corporate climate contributions. He is a member of the EU Expert Group on Carbon Removals, the Science-based Target initiative's (SBTi) Technical Advisory Group, and the board of the KTH-led research program Mistra sustainable consumption. Robert previously headed Oxfam Sweden's policy and communications team and founded the Climate Goal Initiative in Sweden.

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