In a recent blog post, Resources for the Future explored Product Carbon Intensity Standards (PCIS), an emerging policy approach designed to reduce the emissions associated with producing individual products.

But what could PCIS mean in practice? Our Technical Lead, Tahmid Mizan, breaks down 3 things you may not know about PCIS:

1. Less carbon, more affordability and competitiveness. PCIS can reduce emissions while limiting impacts on affordability and competitiveness. Other carbon policies can raise the price of carbon-intensive products substantially. An average carbon intensity standard can incentivize cleaner production while supporting affordability, strengthening competitiveness and helping address carbon-leakage concerns. 
2. Lower-carbon products: a source of competitive advantage. PCIS creates competition around carbon performance rather than prescribing how companies decarbonize. One potential design uses tradable performance credits: producers below the carbon-intensity target generate credits, while producers above it purchase them. This rewards companies that outperform the standard while allowing different technological pathways to achieve reductions. By rewarding products that outperform a carbon-intensity benchmark, PCIS can turn lower-carbon production into a source of competitive advantage and a better value proposition.
3. A flexible tool for policymakers. Policymakers can design PCIS that work best for their country or region, including which products to cover, whether to regulate individual products or groups/precursors, how credits could trade, and what emissions boundaries to use based on their industrial and economic needs and in alignment with their national decarbonization targets. The flexibility of the system, if implemented efficiently, is a strength. 

Rather than prescribing a specific technology or pathway, PCIS can set the performance target and create incentives for companies to innovate and find cost-effective ways to reduce emissions.

Did you know these things about PCIS? Read RFF’s full analysis and join the conversation.

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