An Economic Perspective on a Carbon Management Program at the University of Michigan
The recent UN IPCC special report stated that, in order to stay at or below 1.5 degrees of warming, greenhouse gas emissions will need to be reduced by 45 percent below 2010 levels in the next decade, and reach net zero emissions by 2050. These are much steeper cuts than previously estimated and as such, will require immediate collective action considering that global emissions are still rising.
In February 2019, the University of Michigan announced the formation of the UM President’s Commission on Carbon Neutrality charged with charting a course to net zero carbon emissions. This report focuses on evaluating the marginal cost and abatement potential of different options available to the university, such as a renewable energy power purchase agreement, the Central Power Plant upgrade, and commoditized emissions reductions like cap-and-trade permits and carbon offsets. Additionally, we examine the feasibility of instituting a carbon tax on campus by performing a simulation on selected schools to illustrate how different tax levels and rebate schemes would affect each schools’ budget.