You can use En-ROADS to simulate a carbon price that increases over time, such as the U.S. legislative proposal H.R. 763, the Energy Innovation and Carbon Dividend Act (EICDA). Note: En-ROADS is a global model, and the EICDA is a proposal for a U.S. carbon price. The method below simulates a carbon price similar to the EICDA plan, if it were implemented globally rather than solely in the U.S.
Climate Interactive Co-Director Andrew Jones gave a presentation on how to model the EICDA in En-ROADS, available here: https://youtu.be/3Qdv_TTD-j4 (note that En-ROADS has been updated since this presentation)
For a deeper dive into understanding carbon pricing in En-ROADS and other models, check out this video by Climate Interactive Co-Director Andrew Jones: https://youtu.be/598oSe7G-Jw (note that En-ROADS has been updated since this presentation)
Under the Carbon Price slider, open the advanced settings by clicking on the three dots next to the Carbon Price slider. Then adjust the settings as follows:
The Carbon Price slider in En-ROADS only covers CO₂ emissions from energy (fossil fuels and biofuel). Note that a Carbon Price reduces investments in oil and gas, which indirectly reduces emissions of methane. Other gases such as CH₄, N₂O, and fluorinated gases (F-gases) are also directly affected by the Methane & Other slider. The EICDA includes a tax on F-gases at a rate of 10% of the tax on other greenhouse gases (when measured in CO2-equivalents). To model this in En-ROADS, you can adjust the advanced settings of the Methane & Other slider by clicking on the three dots next to the slider. Then select “Yes” beside “Use detailed settings,” and scroll down to “Energy and industry emissions (CH₄, N₂O, & F-gases).” Adjust this slider to -8%, which is an approximation of the effect of a 90% reduction target on F-gases in the U.S. (again, keep in mind that while we’re approximating a U.S. bill here, En-ROADS is a global model). In 2020, F-gases are ~8.7% of non-CO₂ greenhouse gas emissions worldwide. A 90% reduction of that is approximately 8%.
You can use the “Revenue & Cost from Taxes & Subsidies” graph to explore the revenue generated by the carbon price.
What’s the basis for these calculations?
Under the EICDA proposal, the carbon price increases by $10/ton per year. However, if cumulative annual emissions targets are not met, starting after Year 5, the price increase changes to $15/ton, where it stays until the targets are met. As modeled in En-ROADS, the carbon price on fuels alone is insufficient to reach the emissions targets each year, and the $15/ton ratchet kicks in. One way to calculate it is to take the maximum carbon price En-ROADS currently allows ($850/ton) and calculate how long it would take to reach that price (58 years). An equivalent average annual price increase over those 58 years is $14.34/ton, which ends up at $847 in 58 years. (We’re grateful to Rick Knight at Citizens Climate Lobby for this accounting). This $14.34 is the average annual increment needed to hit the max allowable En-ROADS price that yields the same annual average price, without exceeding $850, as an EICDA case including a price ratchet. If the targets are not met after 58 years, the price would continue to climb (beyond what is currently allowed in En-ROADS).
This is our understanding of some of the differences between the Carbon Price slider in En-ROADS and the carbon price in the EICDA:
What are other useful FAQs for understanding a carbon price in En-ROADS?
Have more questions? Post in the User Forum on this subject.