The University Model

The University Model

Published on January 21, 2019

As world governments sit idle, Yale experiments with carbon pricing that could save the planet — but is a university the right test bed?

Since Aug. 26, Travis Tran ’21 has placed every piece of his personally-generated trash into a 64-ounce glass mason jar. Filled with a Tide Pod bag, Glutino bar wrapper, cupcake mold and several plastic spoons, the result looks like an avant-garde art piece — a colorful critique of consumerism. The jar, which sits on a shelf in his common room, serves as a physical reminder for him to “live his values.”

Tran feels morally responsible for the trash he creates. After a summer in Tanzania, where he witnessed the damaging effects of climate change firsthand, Tran has committed to a zero-waste lifestyle. He spent the fall semester transforming his Berkeley suite into a hub for environmental innovation. He composts banana peels in an old yogurt container and concocts his own toothpaste, detergent and deodorant from baking soda, vinegars and natural oils. To bathe, he fills an industrial orange Homer’s All-Purpose bucket with four gallons of water and pours it over his body in a Berkeley shower stall.

“When it comes to waste and our earth, I think I have a higher level of caring than most,” said Tran.

While his behavior is admittedly extreme, Tran is by no means alone in his concern for the planet. Over 70 percent of Americans are “alarmed, concerned, or cautious” about climate change, according to the Yale Program on Climate Change Communication, an interdisciplinary research team that investigates barriers and motivators to climate action.

Concern is often an important precursor to climate action at Yale, but the former does not reliably predict the latter. To bridge the gap between value and action, economists and environmentalists have devised a plan: make people pay for pollution through a global tax on carbon.

Carbon pricing creates natural incentives to reduce fossil fuel consumption and develop clean technology. If polluters were to pay the “social cost” of carbon at a rate reflecting the harm they imposed, the theory holds, they would find creative and cost-effective ways to reduce their carbon footprint.

While a carbon tax has received bipartisan support in polls and is cited in climate reports as a panacea, world governments have struggled to impose the kind of comprehensive tax that could save our planet from the environmental, economic and social damage predicted to occur as early as 2040.

As the world debates and awaits the implementation of a carbon tax, Yale and eight other American colleges and universities have taken matters into their own hands. These campuses have launched internal carbon-pricing programs to decrease carbon emissions and promote green innovation. But is it effective to tax emissions within the non-market economy of a college campus?  

Universities are at once optimally and adversely positioned to implement carbon-pricing programs. They can be more transparent with their data than private companies, contributing to global understanding of carbon pricing, and have more flexibility with implementation than a corporation or government.

“As a research university, we are poised to test out new solutions to global challenges,” Virginia Chapman, director of the Office of Sustainability, wrote in an email. “The Yale Carbon Charge provides great visibility around energy use and conservation.”

But given the inherent difficulty of financially incentivizing students and faculty who do not personally pay energy bills, Yale forest policy professor Robert Mendelsohn has some reservations about universities sharing their experimental results.

“From theory to practice, the devil is always in the details. Great ideas can be defeated without proper application,” said Mendelsohn. “We don’t want to prove that pricing is a bad idea just because it wasn’t administered properly on one campus.”

Casey Pickett, the director of Yale’s internal carbon-pricing program, takes a different stance.

“Carbon pricing in a non-market economy is not the most obvious fit,” said Pickett. “But at some point, it becomes a wasted effort to try to predict and perfect everything. It’s useful to just go out and try it.”

 

Yale’s carbon-pricing program came about as a collaborative effort between its students and professors. The carbon tax is the brainchild of Yale economics professor William Nordhaus ’63, who has advocated for taxation as an effective climate remedy since the 1970s.

On Dec. 10, Nordhaus collected his prize: a Nobel diploma, a medal and 4.5 million Swedish krona, equivalent to about $500,000. Months earlier, Nordhaus learned he’d won the Nobel Prize in economics while still in bed. “I slept through it,” he said, at a press conference.

He was honored for calculating the economic damage inflicted by a single ton of emitted carbon — a model that translates into a succinct policy, backed by scientists and economists alike: Tax what you don’t want.

“Nordhaus’ prize gives added impetus to the idea of carbon charges as the right kind of policy to drive not just attention to climate change, but also the innovation required to spur a clean energy future,” said Daniel Esty, a professor of environmental law at Yale.  

But since the mid-1990s, when Nordhaus’ solution first gained political attention, no major world government has succeeded in imposing the kind of carbon tax for which Nordhaus and his colleagues advocate. In Washington state, a referendum to create a first-in-the-nation carbon tax was easily defeated last November. Another plan, co-authored by former Republican Secretaries of State James Baker and George Shultz, hopes to make carbon pricing more attractive by returning all proceeds from a $40 per ton carbon tax to the American people on an equal and monthly basis via dividend checks. While the plan has received bipartisan support, according to an October poll by the Yale Program on Climate Change Communication, its passage in Congress looks unlikely under the current administration. In theory, a carbon tax is a more efficient way to reduce carbon emissions than regulation, but at the ballot, voters struggle to justify policies that raise their current cost of living in return for a more livable planet in the distant future.

This inaction has come at a high price. On the same day in October when the Royal Swedish Academy of Sciences announced Nordhaus’ Nobel, the Intergovernmental Panel on Climate Change released a landmark report, produced by 91 scientists, including Yale environmental studies professor Karen Seto. The report predicts that 1.5 degrees Celsius of warming above pre-industrial levels could come as early as 2040, causing food shortages, flooding and the displacement of tens of millions of people. At the same time, America’s emissions show no sign of slowing. In fact, this year, they rose by 3.4 percent, the largest leap since 2010, according to the Rhodium Group. To curb emissions, the IPCC report recommends swift action through a global carbon tax. Nordhaus estimates a critical two or three–year period to successfully implement a global carbon-pricing program while avoiding the estimated $54 trillion–worth of damage expected by 2040.

On campus, things are looking more hopeful. In 2014, professors Nordhaus and Esty hosted an outdoor “teach out” on Cross Campus to discuss solutions to climate change in celebration of Earth Day. Inspired by the discussion, a group of graduate and undergraduate students drafted and submitted a letter to the Yale administration suggesting that the University adopt a carbon-pricing program. President Peter Salovey appointed a committee to investigate the feasibility of the program, and at their recommendation, Yale launched a financially impactful pilot carbon charge program in 2015 — the first university in the world to do so.

The pilot program initially included 20 Yale buildings and tested four different schemes. Collectively, the pilot units reduced emissions by 4.9 percent below the baseline, more than the control group’s 1.4 percent reduction. In 2017, Yale expanded the carbon-pricing scheme to 259 campus buildings that together account for about 70 percent of the institution’s emissions. In January 2018, Yale launched the Carbon Charge in its residential colleges. Each participating building receives a monthly report detailing its electricity, chilled water, natural gas and steam consumption. These emissions are reported in metric tons of carbon dioxide equivalent and made publicly accessible on the Energy Explorer an interactive digital map created and maintained by Yale Facilities.

Yale’s revenue-neutral carbon charge is essentially a redistribution of funds between the University’s planning units, based on their emissions reduction as compared to the campus average. Like business units in a corporation, planning units are the University’s top-level administrative designations, including its graduate and professional schools, museums and libraries, senior administrative offices, and operational departments. Under the Carbon Charge, each planning unit has two budget lines in its monthly report: a charge line for its buildings’ carbon charges, priced at $40 per MTCDE emitted, and a return line, which gives a percentage of the University-wide carbon charge to each planning unit. If a building outperforms the campus average in emissions reductions, its return exceeds its charge, netting funds for its planning unit. If a building underperforms the campus average, its charge exceeds its return, and the planning unit contributes the net funds to the carbon charge.

Every Yale College building — from William L. Harkness Hall and Linsly-Chittenden Hall to the 14 residential colleges — falls under the designation of one planning unit: the Faculty of Arts and Sciences, headed by Dean Tamar Gendler. While Yale College, headed by Dean Marvin Chun, is organizationally independent from the Faculty of Arts and Sciences, all of its buildings roll up to the FAS financially. For example, if Pierson College students turned off their lights, turned down their heat and shortened their showers, thereby reducing Pierson’s emissions, Deans Gendler and Chun could choose to financially reward the College. If Pierson was particularly wasteful one month, the FAS pays its charge. Back in the 2016 pilot program, Pierson College received a $3,000 rebate for their energy reduction, which it plans to invest in automatic water bottle refill stations.

“For the Carbon Charge to be effective at the residential college level, we needed to get students involved,” said Tanya Wiedeking, the Carbon Charge Liaison for the Council of Heads of Colleges and the building manager of Pierson College.

“Students need to be at the center of the Carbon Charge in its design, implementation and the evaluation of lessons learned, especially as end-users of energy at Yale,” said Ryan Laemel ’14, a former project manager of the Yale Carbon Charge, who urges students to take ownership of the program in order to maximize its efficacy.

Residential colleges present a unique set of challenges for the Carbon Charge program. As with any campus building, its students, faculty and staff do not personally pay energy bills. An optimal pricing system would incentivize every member of the Yale community, but under this model, responsibility falls primarily on building managers and heads of planning units. As residential buildings, the colleges also face the challenge of full-time occupancy and personalized climate zones. Tran’s suite in Berkeley might be turning down their heat and limiting their showers, but their efforts could be completely offset by their neighbors across the hall. On the other hand, since energy use in the colleges is highly dependent on occupant behavior, they present a major opportunity for collective student impact.

Sarah Brandt ’17 wrote her senior thesis on the environmental attitudes of Yale students and faculty under the Carbon Charge pilot program. She identified concern for the environment as the primary driver of emissions-reducing behavioral change, but her research concluded that people at Yale would be willing to further reduce their consumption with decentralized economic incentives, clear feedback on energy use and more collaboration. With these ideas in mind, the Carbon Charge Working Group — a student group spearheaded by Wiedeking — is spreading awareness and rewarding good energy habits within the residential colleges.

“Most of our work is figuring out how to get the word out to students,” said Trini Kechkian, a Pierson sophomore in the CCWG. “Because when students are aware and participating in an internal carbon-pricing program, it gives them some sense of agency in a problem where we most often feel helpless.”

The Carbon Charge Challenge last spring offered cash prizes for innovative ideas to save energy in the residential colleges. The winning proposal advocated for incorporating a sustainability workshop into first-year orientation. Wiedeking transformed the “Recess Checklist,” a list of energy-saving measures students should take before going on break, into a lottery for Pierson students to win a free suite dinner and movie.

“Pizza is a very good motivator,” said Esty. “In my experience, on a college campus, it’s probably the single strongest economic incentive, which goes to my spirit of green lights, a reward for doing what we want people to do.”

The Yale College planning unit received a modest return in the most recent financial year, according to Wiedeking. Among Yale College buildings, the residential colleges were the biggest contributors to energy reductions and returns, which attests to the positive impact student behavior can have in tackling the emissions problem. But as a whole, is the Yale Carbon Charge working?

Eighteen months have passed since the Carbon Charge’s campuswide expansion, but according to the program’s director Casey Pickett, it is too early to assess its efficacy and impact. Pickett, who runs the carbon charge program from the Provost’s Office, estimates it will take at least five years to produce significant data. When it comes to climate action, five years is a long time. Nordhaus predicted a critical two to three–year period to implement a global carbon tax and avoid $54 trillion in damage.

Unlike most major studies, Yale has no clear control group to which to compare its results. Rather than retain the initial non-charged control group, the program was implemented as widely as possible in 2017. So to measure impact, Pickett plans to compare Yale emissions levels to other institutions with similar consumption meters but without a carbon charge program.

Like Mendelsohn, Pickett is wary of prematurely releasing an analysis, in part because carbon-pricing schemes tend to affect long-term decision-making, like the construction of new buildings and purchasing of major pieces of equipment, not short-term outcomes.

“It’s a dicey thing,” said Pickett. “You don’t want to report on the experiment before a reasonable person would expect there to be a result, because the lack of a result could be misinterpreted as a lack of an impact, when it’s really just too early to say.”

Besides, for Pickett, emissions reduction is almost beside the point. He views the Carbon Charge program as an experiment and the campus as its petri dish. Its success depends on its academic value and its ability to produce research that could inform local, state and national policy design.

“There are lots of different ways we could reduce campus emissions with much greater confidence. The purpose of this effort is to experiment with carbon pricing,” Pickett said. “This will be a success whether it has an impact or not because there is a lot of useful information to be harvested.

Thankfully, Yale’s Office of Sustainability is taking other steps to reach its emission reduction goals, mainly through capital projects and operational improvements executed by Yale’s Energy Management team. The University is on track to meet its 2050 commitment to carbon-neutrality, including its intermediary goal to reduce emissions 43 percent below 2005 levels by 2020.

Despite lingering uncertainty about efficacy, carbon-pricing programs are taking off at universities across the country. Pickett — in collaboration with researchers at Swarthmore College, Smith College and Second Nature, a non-profit — has developed a toolkit to help campuses implement a version of Yale’s policies.

“Colleges and universities are uniquely positioned to innovate and inform the broader effort,” said Alex Barron, an environmental science professor who worked with undergraduates on a $70 proxy carbon price at Smith College. “With the toolkit, we can help other schools, so they don’t have to reinvent the wheel each time.”

After hearing about the Yale Carbon Charge, Camilo Monge SOM ’19, a Peruvian economist, was inspired to bring internal carbon pricing to campuses in Peru. He found the toolkit very helpful in developing his proposal.

“My background has zero relation to any sort of carbon charge, but having this toolkit available made all the difference,” said Monge. “It has a lot of potential, and it has to go outside the U.S. — to China, to India, the big guys.”

Pickett expressed the potential for Yale to learn from peer institutions as they adopt their own carbon-pricing models. Each university will serve as a new test bed.

“As more institutions engage in carbon pricing, we’ll start to see lots of different approaches,” Pickett said. “I hope that we will make some adjustments to our own program design to help this policy idea better fit the institutional context.”

As the movement spreads in the education sector, climate activists on campus hope to influence the wider policy discussion.

“Our program has started so many conversations about effective climate policy on campus,” said Nathaniel Graff, a Climate Action Senior Fellow, working on a revenue-positive carbon-pricing model at Swarthmore. “But the real question is: How do we get this off campus? How do we get this in states and nations and across the globe?”

Universities can bring visibility to the global challenge of emissions reduction, ideally pressuring governments to implement market-based environmental solutions of their own. In the absence of government initiatives, Students for Carbon Dividends — a bipartisan student-led movement that aims to catapult the Baker-Shultz carbon dividends plan into the national spotlight — is lobbying for carbon pricing on college campuses.

“Campus carbon pricing could genuinely help colleges meet their emission reduction goals, birth a flood of new research and keep student conversation focused on carbon pricing in sync with national-level outreach,” said Alexander Posner ’19, the co-founder and president of the group.

But in the ominous countdown to 2040 and beyond, focusing the national conversation on carbon pricing is not enough. As politicians debate the merits of a global carbon tax and Yalies await the Carbon Charge results, concrete climate action is needed more than ever. Without external incentives, genuine concern for the environment — rather than the free market — must drive this green innovation.

At Yale, most pro-environmental behavior is motivated by concern.

“More than any other single factor, both interviewees and survey respondents cited their concern for the environment as what motivated them to abate their energy use in buildings at Yale,” wrote Brandt in her thesis. “This mentality is an important precursor to environmental action, and the success [of climate action] might hinge on a predisposed sympathy for environmental causes.”

Yale’s student-led environmental innovation takes many forms: from projects that help local food trucks go solar and publications that highlight environmental news to sit-ins that demand Yale divest from fossil fuel companies — the most recent of which resulted in 48 arrests. While these avenues of activism have little in common, they all function independently of economic incentives. And there’s Tran, for whom green innovation, from dorm-room composts to bucket showers, is a way of life.

“We need market-based approaches and national policies to change the world in a substantial way,” said Tran. “But in the meantime, I ask what are some actual steps I can take right now? If I want to tackle the problem of carbon emissions, I can at least start with myself.” 

 

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