1.1. Why would a private company voluntarily adopt internal carbon “taxes?” As we have seen in this chapter, many economists favor the use of carbon prices to reflect the social cost of carbon emissions on the environment. Although we do not yet have a nationwide tax on carbon, we have seen a number of organizations using their own internal carbon “taxes” to change the behavior of their workers.

Walt Disney and Microsoft are two of the leaders among U.S.

companies in using carbon taxes. As you likely know, Disney runs a number of parks and also has a sizeable fleet of cruise ships. The potential for carbon emissions from these businesses is large, especially from the cruise ships, which use a good deal of fuel. Beginning in 2009, Disney decided to try to make its own executives more sensitive to the way their decisions affected carbon emissions by imposing an internal carbon fee. For a range of corporate activities and investments, carbon emissions were calculated and then a division running an operation or planning an investment was charged by the center for the carbon their operations or investments produced.