Effective carbon pricing has become essential for climate action. MIT’s EN-ROADS climate simulator demonstrates that carbon pricing reaching $50-100 per ton of CO₂ by 2030 and $200 per ton by 2050 represents one of the most powerful policy levers available, potentially reducing global temperature increase by 1.5-1.8°C if implemented globally.

In a previous piece I argued that U.S. Federal debt and carbon emissions create the perfect storm for a carbon tax. While the naysayers abound across the political spectrum, I am optimistic this can happen. I recently pointed out that ExxonMobil supports a price on carbon since it is essential to their Low Carbon Solutions business. So does the American Petroleum Institute. While I recognize the political challenges in making this happen and I will be suggesting an approach in a future piece, here I want to focus on the measurement and reporting infrastructure that is a necessary but not sufficient condition to make this happen.

Carbon tax cloud icon. Clipart image isolated on white background (Photo: iStock)

 

Carbon pricing’s power stems from its economy-wide reach and market-based efficiency. Unlike sector-specific regulations that require governments to predict technological winners, pricing creates incentives across all economic activities simultaneously, allowing the market to discover the lowest-cost decarbonization pathways. Companies facing carbon costs make millions of independent decisions about efficiency improvements, fuel switching, and innovation, thereby generating solutions regulators couldn’t anticipate. The EN-ROADS modeling shows that while no single policy achieves climate goals alone, carbon pricing complements other interventions more effectively than any alternative, amplifying the impact of renewable energy deployment, electrification, and efficiency improvements. Yet this policy tool can only function if built on reliable, comprehensive carbon accounting that assigns accountability appropriately while enabling market mechanisms to operate efficiently.

The September 2025 announcement of the GHG Protocol/ISO partnership to develop harmonized product carbon footprint standards is a welcomed and exciting development. At the same time, there is much discussion about the E-Ledgers approach, focused on product-level carbon accounting. (You can learn more about it at the E-ledgers Institute.) We are now facing a critical issue. Will the GHG Protocol/ISO and E-Ledgers’ initiatives work together or compete against each other? The bottom line is that collaboration will provide an incredible infrastructure for carbon pricing and competition between these two approaches will lead to a destructive altered state of paralysis and chaos.

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