Arbeitspapier
Pigou's Advice and Sisyphus' Warning: Carbon Pricing with Non-Permanent Carbon-Dioxide Removal
Carbon dioxide removal from the atmosphere is becoming an important option to achieve net zero climate targets. This paper develops a welfare and public economics perspective on optimal policies for carbon removal and storage in non-permanent sinks like forests, soil, oceans, wood products or chemical products. We derive a new metric for the valuation of non-permanent carbon storage, the social cost of carbon removal (SCC-R), which embeds also the conventional social cost of carbon emissions. We show that the contribution of CDR is to create new carbon sinks that should be used to reduce transition costs, even if the stored carbon is released to the atmosphere eventually. Importantly, CDR does not raise the ambition of optimal temperature levels unless initial atmospheric carbon stocks are excessively high. For high initial atmospheric carbon stocks, CDR allows to reduce the optimal temperature below initial levels. Finally, we characterize three different policy regimes that ensure an optimal deployment of carbon removal: downstream carbon pricing, upstream carbon pricing, and carbon storage pricing. The policy regimes differ in their informational and institutional requirements regarding monitoring, liability and financing.
- Sprache
-
Englisch
- Erschienen in
-
Series: CESifo Working Paper ; No. 10169
- Klassifikation
-
Wirtschaft
Allocative Efficiency; Cost-Benefit Analysis
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Climate; Natural Disasters and Their Management; Global Warming
Environmental Economics: Government Policy
- Thema
-
carbon dioxide removal
carbon capture
social cost of carbon
climate policy
impermanence
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Kalkuhl, Matthias
Franks, Max
Gruner, Friedemann
Lessmann, Kai
Edenhofer, Ottmar
- Ereignis
-
Veröffentlichung
- (wer)
-
Center for Economic Studies and ifo Institute (CESifo)
- (wo)
-
Munich
- (wann)
-
2022
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:45 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Kalkuhl, Matthias
- Franks, Max
- Gruner, Friedemann
- Lessmann, Kai
- Edenhofer, Ottmar
- Center for Economic Studies and ifo Institute (CESifo)
Entstanden
- 2022
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