Pricing carbon emissions

from theoretical foundations to corporate practice




 climate policy , the price of carbon dioxide,  internal price,  corporate carbon pricing


Climate economists have long been concerned with setting the price of carbon emissions, which can provide a good basis for making climate policy decisions and be an effective incentive to reduce emissions. Nowadays, more and more countries have to pay for carbon emissions in the form of taxes or quota purchases, and the so-called internal carbon pricing of emissions has appeared and is spreading rapidly in the environmental management tools of large companies. This article provides an overview of the theory and practice of carbon pricing, its different applications and price developments. Official prices are expected to move closer to economically ‘correct’ values as climate policy tightens, and the main goal of corporate carbon pricing is to prepare companies for these changes. This article shows where this process is currently taking place.


Download data is not yet available.

Author Biographies

Zsófia Nemes, Corvinus University of Budapest

assistant lecturer

Anna Széchy, Corvinus University of Budapest

associate professor


Ackerman, F., & Munitz, C. (2016). A critique of climate damage modeling: Carbon fertilization, adaptation, and the limits of FUND. Energy Research & Social Science, 12(Sept), 62–67.

Ben-Amar, W., Gomes, M. & Marsat, S. (2022). Climate change exposure and internal carbon pricing adoption. Business Strategy and the Environment, 31(7), 2854-2870.

Bento, N. & Gianfrate, G. (2020). Determinants of internal carbon pricing. Energy Policy, 143(August), 111499, ISSN 0301-4215,

BSR-Globescan (2019). The state of sustainable business 2019 – Results of the 11th Annual Survey of Sustainable Business Leaders.

C2ES (Centre for Climate and Energy Solutions) (2017). The business of pricing carbon – how companies are pricing carbon to mitigate risks and prepare for a low-carbon future.

CDP (2021a). Putting a price on carbon. The state of internal carbon pricing by corporates globally.

CDP (2021b). Walt Disney Company – Climate Change 2021.

Csutora, M., & Harangozó, G. (2019). Szén-dioxidelszámolás a hálózati gazdaságban. Vezetéstudomány, 50(9), 26-39.

DECC (UK Department of Energy and Climate Change) (2019). Green Book supplementary guidance: valuation of energy use and greenhouse gas emissions for appraisal.

DiCaprio, T. (2015). Making an impact with Microsoft’s carbon fee. Microsoft Corporation.

EMBER (2021). Daily EU ETS carbon market price.

Fankhauser, S., Tol, R.S. & Pearce, D.W. (1997). The aggregation of climate change damages: a welfare theoretic approach. Environmental and Resource Economics, (10), 249–266.

Gyura, G. (2020). ESG és bankszabályozás: Haladni kell a korral. Gazdaság és Pénzügy, 7(4), 372-391.

Harangozó, G., Csutora, M., Tátrai, T., & Vörösmarty, Gy. (2019). A zöld ellátásilánc-menedzsment fejlődése – múlt, jelen és jövő. Vezetéstudomány, 50(12), 122-135.

Harangozó, G., Széchy, A., & Zilahy, G. (2016). A fenntarthatósági lábnyom-megközelítések szerepe a vállalatok fenntarthatósági szempontú teljesítményértékelésében. Vezetéstudomány, 47(7), 2-13.

Hartje, V., Wüstemann, H., & Bonn, A. (2015). Naturkapital Deutschland – TEEB DE: Naturkapital und Klimapolitik – Synergien und Konflikte. Technische Universität Berlin, Helmholtz-Zentrum für Umweltforschung – UFZ. Berlin, Leipzig.

Harpankar, K. (2019). Internal carbon pricing: rationale, promise and limitations. Carbon Management, 10(2), 219-225.

Heal, G., & Millner, A. (2014). Uncertainty and decisionmaking in climate change economics. Review of Environmental Economics and Policy, 8(1), 120–137.

Hope, C. (2011). The social cost of CO2 from the PAGE09 model. Working paper series 5/2011. Cambridge, UK: Cambridge Judge Business School.

Institute for Climate Economics (2016). Internalcarbon pricing – A growing corporate practice.

Interagency Working Group on Social Cost of Greenhouse Gases, United States Government (2021). Technical support document: social cost of carbon, methane, and nitrous oxide interim estimates under executive. Order 13990.

IPCC (Masson-Delmotte, V., Zhai, P., Pörtner, H. O., Roberts, D., Skea, J., Shukla, P. R., ... & Waterfield, T.) (2018). Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty. Cambridge, UK; New York, NY USA: Cambridge University Press.

IWG-SCGG (Interagency Working Group on Social Cost of Greenhouse Gases, United States Government) (2016). Technical support document: technical update of the social cost of carbon for regulatory impact analysis under executive. Order 12866.

Kolk, A., Levy, D. & Pinkse, J. (2008). Corporate responses in an emerging climate regime: the institutionalization and commensuration of carbon disclosure. European Accounting Review, 17(4), 719–745.

KPMG (2020). The time has come. The KPMG survey of sustainability reporting 2020.

Kuik, O., Brander, L., & Tol, R. S. J. (2009). Marginal abatement costs of greenhouse gas emissions: A metaanalysis. Energy Policy, 37(4), 1395–1403.

Lucas, M.T. (2010). Understanding environmental management practices: integrating views from strategic management and ecological economics. Business Strategy and the Environment, 19(8), 543–556.

McKinsey & Company (2009). Pathways to a low-carbon economy. Version 2 of the global greenhouse gas abatement cost curve.

Neumayer, E. (1999). Global warming: discounting is not the issue, but substitutability is. Energy Policy, 27(1), 33-43.

Nordhaus, W. D. (2007). A review of the Stern review on the economics of climate change. Journal of Economic Literature, 45(3), 686-702.

Nordhaus, W. D. (2017). Revisiting the social cost of carbon. Proceedings of the National Academy of Sciences, 114(7), 1518–1523.

Parnell, J. (2020). BP adopts $100 carbon price assumption for 2030, with big implications for clean energy. Greentechmedia.

OECD (2018). Effective Carbon Rates 2018: Pricing carbon emissions through taxes and emissions trading. Paris, France: OECD Publishing.

Quinet, A. (2019). La valeur de l’action pour le climat. Une valeur tutélaire du carbone pour évaluer les investissements et les politiques publiques. France Stratégie.

Sathaye, J., & Shukla, P. R. (2013). Methods and models for costing carbon mitigation. Annual Review of Environment and Resources, 38(1), 137–168.

SBTI (2020). Foundations for science-based net zero target setting in the corporate sector. Science Based Targets Initiative.

Smith, S., & Braathen, N. A. (2015). Monetary carbon values in policy appraisal: an overview of current practice and key issues. OECD Environment Working Papers, No. 92. Paris, France: OECD Publishing.

Stern, N. (2008). The economics of climate change. American Economic Review, 98(2), 1-37.

Stiglitz, J. E., Stern, N., Duan, M., Edenhofer, O., Giraud, G., Heal, G. M., la Rovere, E. L., Morris, A., ...Winkler, H. (2017). Report of the high-level commission on carbon prices. Washington, D.C.: The World Bank.

Széchy, A. (2020). Environmental and climate policy. Budapest: Budapesti Corvinus Egyetem.

TCFD (2017). The use of scenario analysis in disclosure of climate-related risks and opportunities. Basel, Switzerland: TCFD.

The World Bank (2021). State and Trends of Carbon Pricing 2021 (May). Washington, D.C: The World Bank.

Tol, R.S.J. (2009). The economic effects of climate change. Journal of Economic Perspectives, 23(2), 29–51.

UBA – UMWELTBUNDESAMT (2012). Best Practice Kostensätze für Luftschadstoffe, Verkehr, Strom- und Wärmeerzeugung: Anhang B der Methodenkonvention 2.0 zur Schätzung von Umweltkosten. Umweltbundesamt, Dessau-Rosslau.

UBA – UMWELTBUNDESAMT (2018). Methodenkonvention 3.0 zur Ermittlung von Umweltkosten – Methodische Grundlagen. Umweltbundesamt, Dessau-Rosslau.

UBA – UMWELTBUNDESAMT (2019). Methodenkonvention 3.0 zur Ermittlung von Umweltkosten – Kostensätze. Umweltbundesamt, Dessau-Rosslau.

US-EPA (2019). Regulatory Impact Analysis for the Repeal of the Clean Power Plan, and the Emission Guidelines for Greenhouse Gas Emissions from Existing Electric Utility Generating Units.

van den Bergh, J. C., & Botzen, W. J. W. (2015). Monetary valuation of the social cost of CO2 emissions: a critical survey. Ecological Economics, 114(June), 33-46.

Waldhoff, S., Anthoff, D., Rose, S., & Tol, R. S. J. (2014). The Marginal Damage Costs of Different Greenhouse Gases: An Application of FUND. Economics: The Open-Access, Open Assessment E-Journal, 8(2014- 31), 1-33.

WBCSD/WRI (2004). The Greenhouse Gas Protocol – A Corporate Accounting and Reporting Standard. Geneva, Switzerland: World Business Council for Sustainable Development and World Resources Institute.

WBCSD/WRI (2011). The Greenhouse Gas Protocol – Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Supplement to the GHG Protocol Corporate Accounting and Reporting Standard. Geneva, Switzerland: World Business Council for Sustainable Development and World Resources Institute.

WBSCD (2015). Emerging practices in internal carbon pricing: a practical guide. Washington, DC: WBCSD Leadership Program.

Weitzman, M. L. (2007). A review of the Stern Review on the economics of climate change. Journal of Economic Literature, 45(3), 703-724.

Willmott, E. (2022). How Microsoft is using an internal carbon fee to reach its carbon negative goal. Microsoft Industry Blogs. industry-blog/sustainability/2022/03/24/how-microsoft-is-using-an-internal-carbon-fee-to-reach-its-carbon-negative-goal/

Zhu, B., Xu, C., Ping, W. & Lin, Z. (2022). How does internal carbon pricing affect corporate environmental performance? Journal of Business Research, 145, 65- 77.




How to Cite

Nemes, Z., & Széchy, A. (2023). Pricing carbon emissions: from theoretical foundations to corporate practice. Vezetéstudomány Budapest Management Review, 54(2), 40–52.



Studies and Articles