Practice #P008 Supply & Energy

Carbon has a price. You are not using it.

"28% of global emissions are now covered by a carbon pricing mechanism. CBAM entered its definitive phase on January 1, 2026. Yet only 14 to 18% of companies have an internal carbon price. The companies that do are selecting better suppliers, making better capital decisions, and building stronger net-zero credibility. The rest are flying blind into a carbon-priced world."

28%

Of global emissions now covered by 80 carbon pricing mechanisms. CBAM entered financial phase January 1, 2026.
(World Bank / WBCSD, 2026)

14-18%

Of companies have an internal carbon price. Of those, two-thirds use only a shadow price, not embedded in decisions.
(WBCSD / BCG, 2025)

#Internal-Carbon-Price #CBAM #Net-Zero #Capital-Allocation

THE DECISION STAKES

Without a carbon price, your investment decisions are incomplete.

"Ignoring carbon pricing is akin to a short bet that its impact will remain minor, exposing companies to unnecessary risk." — WBCSD, Internal Carbon Pricing Guidance, March 2026

An internal carbon price is not a sustainability tool. It is a financial discipline that makes future regulatory costs visible in today's investment decisions.

The CFO who applies a $50 per tonne shadow price to a 10-year capex decision is not being conservative. The EU ETS is at EUR 85 per tonne today. CBAM is live. The shadow price is the decision tool that tells you which investments are still viable in 2030.

THE DECISION TOOL

Four moves. One decision you can defend.

ANCHOR

Set a carbon price anchored to an external reference: EU ETS current price (EUR 85/t in April 2026), SBTi-implied trajectory, or a regulatory scenario analysis. The price must be defensible to investors and auditors. A round number with no methodology is not an ICP. It is a press release.

The anchor price determines the investment decisions it filters. A $15/t price screens out almost nothing. A $100/t price changes supplier selection, capex priority, and asset valuation. Start with the regulatory trajectory, not comfort.

EMBED

Apply the carbon price to every capex decision above a defined threshold: calculate the NPV impact of the carbon cost over the asset lifetime, include it in the financial model alongside WACC and IRR. For procurement, apply it as an embedded cost in supplier bid evaluation. If it does not reach procurement, it changes nothing.

Embedding carbon in capex evaluation changes which projects get funded. The asset that looks attractive today at EUR 85/t ETS and unattractive at EUR 130/t is a liability you are building now.

BUDGET

Implement a carbon fee per business unit: charge each BU for its emissions at the internal price, collect into a central decarbonization fund, and allocate that fund to verified emission reduction projects. The fee makes carbon tangible for operational managers. The fund makes decarbonization investable without external funding.

When a plant manager is charged $15 per tonne of CO2, energy efficiency becomes a budget line, not a sustainability goal. Behavioral change follows financial accountability.

ESCALATE

Build a price escalation schedule into the governance framework: annual review tied to regulatory trajectory, SBTi-aligned increases to 2030, board-level sign-off on the price and its applications. A static price set in 2026 will underestimate the regulatory cost by 2030. The escalation schedule is the long-term discipline.

A carbon price that does not escalate is a price that will not prevent stranded assets. EU ETS is projected at EUR 130/t by 2030 (Fastmarkets). The gap between EUR 85 today and EUR 130 in 2030 is the risk your current capex is absorbing silently.

Microsoft

Internal carbon fee: $15 per tonne CO2e, implemented since 2012. Carbon neutral every year since 2012. (Gold Standard / Microsoft Sustainability Report)

$15/t

Internal carbon fee charged to all business units since 2012. Revenue generated was used to reduce 9.5 million tonnes of CO2, purchase more than 14 billion kWh of renewable energy, and support carbon reduction projects in over 30 countries. (Gold Standard analysis; Microsoft Sustainability Reports)

Microsoft implemented an internal carbon fee in 2012 at $15 per tonne of CO2e, charged to every business unit for its Scope 1, 2, and selected Scope 3 emissions. The fee creates a central climate fund that finances renewable energy procurement, energy efficiency projects, and high-quality carbon offsets. Since 2012, Microsoft has been carbon neutral every year. The mechanism is not aspirational. It is an internal pricing system that makes every operational manager financially accountable for their carbon footprint. Microsoft has publicly disclosed that the carbon fee changed how departments evaluate energy contracts, facility investments, and travel decisions.

Microsoft did not become carbon neutral through aspiration. It became carbon neutral by charging business units $15 for every tonne they emitted and using that money to eliminate the emissions.

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Key questions

At what internal carbon price does your current capex pipeline start to fail the NPV test, and how many approved projects would be rejected today?

How do you set the escalation schedule for your internal carbon price when the EU ETS projection for 2030 is EUR 130/t and your board approved EUR 50/t in 2024?

When a business unit is charged a carbon fee and the resulting fund is underdeployed, who owns the accountability for the gap between fee collected and emissions reduced?

Pre-decision checklist

ANCHOR — completed

EMBED — completed

BUDGET — completed

ESCALATE — completed

By Fabrice Macarty

This case resonates?

Anchor your carbon price to the EU ETS trajectory, not a comfort level. Embed it in every capex decision above your materiality threshold. Charge business units a carbon fee and build the decarbonization fund. Set an escalation schedule aligned to 2030 regulatory reality.

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