ID125 Keele Carbon Responsibility Framework

The Idea

Introduce an Internal Carbon Pricing (ICP) system that explicitly recognises the social and environmental costs of carbon- costs currently borne disproportionately by vulnerable communities worldwide rather than by institutions like ours- and internalises them within Keele’s financial governance. Higher education is uniquely placed to demonstrate this principle: internal carbon pricing makes low‑carbon options more competitive, provides financing for decarbonisation, and advances true mitigation while serving as a living laboratory for policy innovation. 

Drawing on emerging practice in carbon pricing, Keele would combine three complementary mechanisms of ICP:  

1. Internal Carbon Levy (Funding Mechanism): an equitable internal carbon levy (e.g. 2 % of departmental non‑pay budgets, excluding utilities spend and business travel) which would represent an estimated carbon price of £35 per tonne of equivalent carbon emissions, applied through annual budgeting to create a ring‑fenced Climate Impact Investment Fund (CIIF). The fund would support initiatives that reduce emissions, enhance climate resilience, restore nature, advance climate justice and create educational opportunities for students to engage with real-world sustainability challenges 
2. Shadow Carbon Price (notional cost applied as a decision-making/signalling tool): a lifetime “carbon cost” (e.g. £100-£250 per tonne of equivalent carbon emissions, aligned with UK Treasury guidance) applied in capital business cases, utilities planning, high-impact procurement (e.g. IT, labs) to ensure lifetime carbon costs are considered alongside financial costs. 
3. Business Travel Carbon Fee (targeted behavioural change ‘nudge’ and responsible offsetting fund): applied at point of booking via Key Travel to reflect a proportion of carbon impact of flights and other travel to address a material Scope 3 source. For example, an indicative price of £100 per tonne of equivalent carbon emissions would result in £160 being added to a Manchester to New York return flight. The corresponding charge would be transferred from the relevant departmental budget to the Climate Impact Investment Fund, ensuring that a proportion of the environmental costs associated with business travel are recognised within institutional decision-making and reinvested in actions that deliver positive environmental and social impact. 

Together, these ICP mechanisms would fund reductions and reshape decisions.  

While aviation and utilities are both subject to UK carbon pricing mechanisms, these only partially reflect the true cost of carbon and are not consistently visible to decision-makers. In utilities, carbon costs are embedded through the UK Emissions Trading Scheme (ETS) and Climate Change Levy (CCL), but these typically translate to implicit prices broadly in the range of ~£40–£60/tCO₂- well below widely recognised estimates of the full social cost and largely hidden within energy tariffs rather than explicitly shown to users. Aviation is even less comprehensively priced: UK ETS coverage is limited (excluding most long‑haul flights), and Air Passenger Duty is distance-based rather than emissions-based. As a result, existing UK carbon levies provide incomplete and often invisible signals, meaning carbon is systematically underweighted in decisions. Internal carbon pricing is designed to sit alongside these mechanisms by making carbon costs explicit and decision-relevant; the business travel carbon fee introduces a visible signal at the point of booking travel, while the shadow carbon price applies a higher value in appraisals- for example in assessing the upfront and operational costs of a gas boiler vs an air-source heat pump- ensuring the full lifecycle carbon impact is recognised and difficult to ignore. 

Operationally, the levy functions like a standard internal recharge in annual budgeting, the shadow price is a required line in capital appraisals, and the business travel fee is applied at point‑of‑booking, minimising admin while sending a behavioural signal. In doing so, Keele embeds climate justice into financial governance, acknowledging externalised harms and sharing responsibility by pricing carbon within budgets, transparently directing revenues to decarbonisation, adaptation, and student‑centred sustainability outcomes. 

Why This Idea Should Be Considered

Internal carbon pricing enables Keele to internalise and demonstrate commitment to taking responsibility for the social/environmental cost of generated carbon emissions, by embedding carbon considerations directly into budgeting, procurement and investment decisions. By combining an equitable levy, a shadow carbon price and a targeted business travel fee, Keele can generate dedicated, ring‑fenced funding for decarbonisation and biodiversity projects, while also reducing emissions implicitly through better purchasing decisions especially in high‑impact categories such as laboratory equipment, IT and capital assets, and encouraging reuse, recycling or sharing of resources. While the detailed design and implementation of the framework will require careful consideration, the approach is naturally compatible with existing finance processes and strengthens Keele’s ability to deliver its decarbonisation and nature‑positive ambitions while embedding climate justice into financial governance. 

How We Would Implement This Idea

The Internal Carbon Levy would be applied through existing budget-setting processes, operating in a similar way to internal recharges, and ringfence a ‘Climate Impact Investment Fund’ of around £0.5-1 million annually. This would be decided with consideration of the previous year’s Scope 3 report which estimates carbon emissions based on purchase ledger spend (~19,000 tonnes for 24/25; 2% represents a cost of £35/tonne of equivalent carbon emissions and ringfences an overall fund of £0.69 million). This approach could support and be complemented by the proposed Circular Economy Starter Programme (ID086) which could enable departments to reduce the need for new purchases without compromising performance or delivery through enhanced reuse, repair, and refurbishment of existing assets. Funds would be deployed in a transparent and equitable way, supporting a pipeline of small, high-impact projects and shared resources across the University, ensuring that all areas, including those with more constrained budgets, can access the benefits of investment and see a clear return. 

The Shadow Carbon Price, while not creating a real financial charge, is the most effective mechanism for reflecting the true cost of carbon. It should therefore be embedded as a mandatory component of all financial appraisals, reported alongside conventional costs in decision papers, and incorporated into annual financial reporting to University Council. This would establish clear governance, visibility, and accountability for carbon impacts, ensuring they are consistently recognised and cannot be easily overlooked. 

For example, within utility budgets, the campus currently consumes approximately 1.5 times more gas than electricity; however, the billed cost of gas (~£1.7 million in 24/25) is typically less than half that of electricity (~£4 million). Applying a shadow carbon price of £250/tCO₂e would add approximately £1.2 million to the total cost of gas, compared to only ~£0.34 million for electricity (which will further lessen as the UK grid decarbonises). While this would not result in additional expenditure, making the environmental and social cost of carbon visible in financial terms should impact targets for energy consumption and influence investment decisions, particularly in relation to heat decarbonisation and building fabric improvements. 

The Business Travel Carbon Fee would be integrated into existing booking systems, working with Key Travel (or future providers) to enable implementation with minimal disruption. This proposal recognises that there is significant educational, research and global engagement benefits of travel, and that any implementation would require careful consideration of practical, funding and operational constraints. The fee is therefore not intended to discourage valuable academic or professional activity, but to encourage more informed and conscious travel decisions by making carbon impacts more visible within existing planning and budgeting processes. Where feasible, it would promote lower-carbon alternatives, such as rail travel in place of short-haul flights, or the selection of more efficient routes and itineraries. Implementation would be developed in consultation with Procurement, Research Finance and academic stakeholders to ensure compatibility with external funding requirements and to identify any supporting policies needed to enable lower-carbon travel choices in practice.  

Working with Key Travel, who already provide a range of carbon management services, the Business Travel Carbon Fee could be applied automatically through existing booking processes. Revenue generated would form part of the ring-fenced Climate Impact Investment Fund and would primarily be directed towards emissions reduction and climate-impact projects within Keele's sphere of influence. Where appropriate, a proportion could support high-integrity carbon removal or climate mitigation projects defined as ‘responsible offsetting’, in accordance with the University's Carbon Accounting, Management and Reporting Code of Practice. 

An example of how Internal Carbon Pricing could work in practice, and be self-reinforcing, is set out here using broad approximations of carbon and cost levels and impacts; 

• The Climate Impact investment Fund, created from the Internal Carbon Levy and Business Travel Carbon Fee, enables the establishment of a dedicated laboratory equipment reuse and sharing platform, providing the upfront resource required to map existing assets, coordinate sharing across departments, and develop the digital infrastructure needed to support visibility and utilisation. This removes key operational barriers that currently lead to duplication and under‑use of equipment. 
• Alongside this, the shadow carbon price embedded in business cases ensures that the full lifecycle carbon cost of new equipment is visible at the point of decision-making, making reuse, sharing, and optimisation of existing resources the lower‑carbon and financially preferred option. Together, these mechanisms shift investment away from unnecessary capital purchases and towards maximising the value and lifespan of existing assets. 

Using current laboratory spend of ~£1.7M and emissions of ~1,100 tCO₂e, a modest 10–15% reduction in new equipment purchases through shared use and optimisation could deliver £150k–£300k avoided capital expenditure and 120–270 tCO₂e annual carbon savings. 

Oversight would be provided by a Carbon Responsibility Framework Committee, reflecting the University's commitment to social, environmental and ethical responsibility, and comprising representatives from Finance, Estates, Sustainability, EDI, the academic community and the student body. The Committee would be responsible for setting and reviewing the levels and processes of the Internal Carbon Levy, Shadow Carbon Price and Business Travel Fee; agreeing appropriate exemptions or protections (for example, for essential teaching and research activity); reviewing and approving applications to the Climate Impact Investment Fund, allocating funds transparently against agreed criteria and strategic priorities; and governing the consistent application and reporting of carbon costs, including their inclusion in decision papers and annual reporting to University Council. The Committee would also publish an annual impact report for inclusion within the University's Statement of Accounts. 

The approach would not result in a direct increase to student fees. Instead, costs would be internalised within existing budgets, encouraging better decision-making rather than increasing overall expenditure. Safeguards would ensure that essential teaching and research activities, as well as low-income or financially constrained departments, are appropriately protected. By building on existing systems and governance structures, administrative burden would be kept to a minimum. 

Over time, this approach could be developed to grow the scale of the Climate Impact Investment Fund, while remaining proportionate and sensitive to departmental capacity. Further income could be unlocked by recycling cost savings from energy efficiency, reduced procurement and avoided waste back into the fund, creating a self-reinforcing investment loop as described above. In addition, the fund could be used to leverage external grants and co-investment opportunities, amplifying its impact beyond its initial value. Collectively, this would enable the fund to move from supporting smaller, distributed projects to also enabling larger-scale, strategic decarbonisation and infrastructure investments over time. 

What Success Would Look Like

Success would mean true sustainability (not just financial) is embedded as a core business imperative at Keele, rather than a ‘nice-to-do’, and everyone in the University understands the ethical responsibility to act on global environmental (and thereby social) sustainability through everyday decisions, investment choices, and operational practice.  

Keele has a predictable, ring‑fenced fund that accelerates both decarbonisation and biodiversity enhancement and other sustainability initiatives, enabling impactful projects that may otherwise remain unfunded without requiring an increase in overall University expenditure or student fees.  

Capital decisions routinely favour lower‑carbon options because carbon pricing is fully integrated into business cases, functioning as a standard and visible line within appraisal processes. Departments make more climate‑aligned choices in purchasing of goods and services, as carbon becomes a visible and understood factor in planning and spending, leading to a gradual reduction in emissions and waste. Sustainability is no longer perceived as either a barrier to progress or an abstract aspiration; it becomes a tangible, measurable and comparable factor in decision-making. Staff increasingly understand the relationship between their activities and their environmental impact because carbon costs are visible, quantified and directly linked to institutional priorities, helping to foster greater engagement, accountability and innovation across the University. 

The University becomes more energy-efficient, nature-positive and financially resilient, and is recognised as a sector leader in embedding climate responsibility and intergenerational justice within financial governance and operational decision-making. Building on emerging international practice in higher education, Keele would be recognised for developing a distinctive Climate Responsibility Framework that brings together financial governance, behavioural change, climate justice and institutional culture within a single, values-led approach. As a living laboratory for climate governance, Keele would generate evidence, insight and best practice that helps shape sector-wide approaches to carbon pricing and climate responsibility, strengthening its influence on policy, practice and the transition to a low-carbon, nature-positive and socially just future.