Carbon management · cited
Internal carbon price: what you disclose, with or without one
An internal carbon price is a price a company sets on its own emissions to test decisions against.
UK SRS S2 ¶29(f) asks whether and how one is applied, and the price per tonne.
The definition
A price used to test decisions
UK SRS S2 Appendix A defines an internal carbon price as a price an entity uses to assess the financial implications of changes to investment, production and consumption patterns.
It names two common forms: a shadow price and an internal fee.
| Form | What it is | Does money move? |
|---|---|---|
| Shadow price | A theoretical cost per tonne used to test investment decisions | No |
| Internal fee | A charge on business units for the emissions they cause | Yes, inside the organisation |
The disclosure
¶29(f) asks whether and how
Paragraph 29(f) asks whether and how an entity applies a carbon price in decision-making, and the price per tonne it uses to assess the cost of its emissions.
Because the question is “whether and how”, an entity that applies no price still has something to disclose.
UK SRS S2 is voluntary; for companies in UKLR 6, 14, 15, 16 and 22 it is comply or explain for periods beginning on or after 1 January 2027, under PS26/19.
The UK text of ¶29(f) is the same as IFRS S2’s; the full list of cross-industry metrics is on IFRS S2 cross-industry metrics.
In software
What a tool has to record
A carbon management platform should store the price per tonne by date, record each change to it, and link it to the investment cases where it was used.
It should also let an entity record that it applies no price, because that is a disclosure too.
The demonstration to ask a vendor for: show the price, the date it took effect, and one investment case it was applied to. The full list is on carbon management software.
Neither the standard nor its definition sets a price, so this page prints none.
Frequently asked
Internal carbon price, answered
What is an internal carbon price?
UK SRS S2 Appendix A defines it as a price an entity uses to assess the financial implications of changes to investment, production and consumption patterns.
Shadow prices and internal fees are two common forms.
What is the difference between a shadow price and an internal carbon fee?
A shadow price is a theoretical cost used to test investment decisions; no money moves.
An internal fee is a charge on business units for the emissions they cause.
UK SRS S2 Appendix A names both as forms of an internal carbon price.
Does UK SRS S2 require an internal carbon price?
No. Paragraph 29(f) asks whether and how an entity applies a carbon price in decision-making, and the price per tonne it uses.
An entity that applies no price has that to disclose.
UK SRS S2 is voluntary for any entity, and comply or explain for companies in UKLR 6, 14, 15, 16 and 22 for periods beginning on or after 1 January 2027 under PS26/19.
What price per tonne should we use?
This site prints no typical price.
Neither UK SRS S2 nor its Appendix A sets one, and a figure from a survey would be another organisation’s choice, dated.
Set the price your decisions need, record it by date, and disclose the basis.
What should software record about an internal carbon price?
The price per tonne, the date it took effect, each change to it, and where it was applied, such as an investment case.
An entity with no price should be able to record that it applies none.
Sources
Primary sources
Every requirement on this page traces to the provision listed here.
- Department for Business and TradeUK SRS S2 Climate-related Disclosures (PDF), ¶29(f) and Appendix A
The disclosure and the definition of an internal carbon price.
- Department for Business and TradeUK Sustainability Reporting Standards S1 and S2
Published 25 February 2026 for voluntary use.
- Financial Conduct AuthorityPS26/19 — final rules on UK SRS reporting by listed companies
Comply or explain for UKLR 6, 14, 15, 16 and 22, periods from 1 January 2027.
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