As global climate risks intensify and net-zero emission policies accelerate, putting a price on carbon has become an important variable in business operations in the 21st century. From carbon tax, carbon trading scheme (ETS) to carbon fee, governments around the world have successively introduced carbon pricing mechanisms, and companies have gradually introduced "internal carbon pricing" (ICP) systems as a decision-making tool to predict risks and promote low-carbon transition. This article summarizes the current system types, practical benefits, applicability, and challenges of enterprise ICP implementation, and explores how government regulation affects the design of ICP systems, hoping to provide enterprises with a more forward-looking governance and response framework in the low-carbon transformation process.

 1. The Origin and Institutional Connotation of Internal Carbon Pricing 

Internal carbon pricing stems from the company's prediction of future carbon cost externalization trends. There are five types of systems: Shadow Price, Internal Carbon Fee, Implicit Price, Internal Emissions Trading, and Carbon Fund, each with different mechanisms and functions. Among them, shadow prices are mainly used to assess the carbon risk of future investment plans. The internal carbon fee actually collects carbon costs from various departments and then invests in low-carbon technologies and projects. Internal trading and carbon funds encourage competitive carbon reduction among departments, creating incentives for cross-departmental collaboration. 

2. The role of internal carbon pricing in corporate governance 

According to a study by Zhu et al. (2022) on U.S. listed companies, companies that introduce ICP can reduce carbon emissions per employee by an average of 13.5% and carbon intensity per unit of revenue by 15.7%. Through the internal carbon pricing mechanism, companies can more systematically assess the financial impact of carbon emission behaviors on their operations, promoting technological innovation, R&D transformation, and investment in energy conservation and emission reduction. In addition, ICP also strengthens the transparency and integrity management of corporate governance, with Hossain et al. (2023) pointing out that disclosing ICP information can help improve the quality of management's integrity behavior and sustainability disclosures, establishing a healthier organizational culture and market trust. 

3. Application examples: Delta's high carbon price strategy 

Delta Electronics Thailand set an internal carbon price of US$300 per metric ton of CO2 equivalent in 2022, which is much higher than the average carbon price of the EU ETS. This high-price system is not an actual fee, but serves as a basis for evaluating project investment and operational strategies, mandating that all energy-intensive solutions consider their carbon cost and recycling benefits. The results show that this system effectively promotes resource optimization and the introduction of renewable energy, while strengthening its supply chain competitiveness and brand green image in the international market, making it a successful example of enterprises using ICP to drive operational transformation. 

4. Is ICP applicable to small and medium-sized enterprises? 

At present, the ICP system is still dominated by large multinational corporations, such as Google, Microsoft, Unilever, etc. However, as carbon fee collection and net-zero disclosure obligations extend to the supply chain, small and medium-sized enterprises (SMEs) will be the target of the next wave of ICP proliferation. According to research by Southeast Asian companies, if small and medium-sized enterprises can initially implement simplified ICPs (such as project shadow prices or departmental carbon fee feedbacks), it will not only help estimate carbon costs and choose alternatives, but also help them secure supply chain orders and green financing resources. However, the challenge lies in its information transparency, human resources, and data quality, which still require policy support and guidance. 

5. The role of the government:

 From encouraging to regulating the government's role in promoting ICP, we should start from advocacy and incentive mechanisms and gradually build institutional norms. Taking Taiwan as an example, the carbon fee system to be implemented in 2026 will be based on carbon emission thresholds, and companies can simulate future costs and plan carbon reduction priorities by introducing ICP as internal support. On the other hand, if the government can include the ICP system through tax credits, technical subsidies, green financing, or CDP disclosure comprehensive evaluations, it can encourage companies to internalize carbon pricing, thereby improving their risk management and competitiveness. 

6. Internal carbon pricing promotion strategies and challenges 

Enterprises promoting the ICP system should adopt a "progressive strategy" based on their own maturity: 

Phase 1: Introduce shadow prices as a reference for trial calculations in project investment decisions. 

Phase 2: Internalize carbon prices through departmental carbon fee systems or carbon fund systems to cultivate carbon reduction incentives.

Phase 3: Promote inter-departmental carbon trading and company-wide performance.

 Challenges include: 

• How to set a reasonable and incentivized carbon price? 

• How to prevent the administrative burden from exceeding the benefits of the system? 

• How to integrate with external carbon markets or carbon fee systems? 

• How to establish a reliable carbon emission data foundation? 

7. Conclusion: Creating Opportunities for Transformation from Climate Pressure 

Internal carbon pricing is an important governance tool for enterprises in the net-zero era, not only an extension of energy conservation and emission reduction plans, but also a comprehensive system that combines financial planning, investment management, brand value, and risk control. This paper points out that ICP can not only improve corporate environmental and financial performance, but also promote corporate governance integrity and scientific decision-making. As carbon pricing becomes a mainstream policy, companies should evaluate and introduce ICP systems that align with their own scale and industry characteristics as early as possible to seize the initiative in transformation and strengthen their competitive resilience in a low-carbon economy. In the future, internal carbon pricing will no longer be just a tool for leading companies, but a fundamental threshold for all companies to move towards sustainability and competitive advantage.