What is the difference between a shadow price and a real internal fee?

A shadow price is a notional cost applied only inside investment appraisals to re-weight decisions; no cash moves. A real internal fee actually charges each unit and pools the money, often redistributing it as a dividend to fund decarbonisation. This tool shows both views from the same inputs.

Which scopes should I include in an internal carbon price?

Many companies start with Scope 1 and 2, which they control directly, then extend to material Scope 3 categories. Including Scope 3 raises the charge substantially for units with large upstream or downstream footprints, which is often the point of the exercise.

How is the fee-and-dividend net effect calculated?

Each unit pays a fee equal to its emissions times the carbon price. The pooled total is then returned as an equal dividend per unit. A unit's net position is its fee minus that dividend: positive means it is a net payer subsidising cleaner units, negative means a net receiver.

What carbon price should I use?

Common reference points are the prevailing EU ETS price, an internal price aligned to a net-zero pathway, or a regulatory shadow price. Higher prices make low-carbon projects look more attractive in the business case, so the price itself is a strategic lever.

Does this replace formal carbon accounting?

No. It is a decision-support model for sizing the P&L impact of a carbon price, not a greenhouse gas inventory. Use audited emissions data following the GHG Protocol for disclosure, and feed those figures in here for the financial overlay.

Internal Carbon Price (ICP) Impact Calculator

An internal carbon price turns tonnes of CO2e into pounds, euros, or dollars so that low-carbon investments compete fairly inside the business case. This calculator allocates that price across your business units and shows two distinct mechanisms: a shadow price that informs decisions without moving cash, and a fee-and-dividend scheme that actually redistributes money toward decarbonisation.

How it works

For each unit the shadow cost is simply emissions times price, summed across the scopes you select:

unit emissions = (S1 if included) + (S2 if included) + (S3 if included)
shadow cost    = unit emissions × carbon price

The fee-and-dividend view collects the same gross fee from every unit, pools the total, and returns it as an equal per-unit dividend. A unit’s net position is its fee minus that dividend, so high-emitting units end up subsidising cleaner ones — the redistribution that gives the mechanism its behavioural bite.

Example and notes

A manufacturing unit emitting 16,000 tCO2e of Scope 1 and 2 at a £75 internal price carries a £1.2m shadow cost. If three units share an equal dividend, a small office unit with low emissions becomes a net receiver while manufacturing is a net payer, sharpening the incentive to cut. Keep the price, the included scopes, and the redistribution rule explicit when you present the numbers — each is a deliberate policy choice, and disclosure frameworks such as CDP and TCFD ask you to state them.