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  On the Governance of Carbon Dioxide Removal – A Public Economics Perspective

Edenhofer, O., Franks, R. M., Kalkuhl, M., Runge-Metzger, A. (2023): On the Governance of Carbon Dioxide Removal – A Public Economics Perspective, (CESifo Working Papers ; 10370), München : Munich Society for the Promotion of Economic Research - CESifo, 45 p.

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 Creators:
Edenhofer, Ottmar1, Author              
Franks, R. Maximilian1, Author              
Kalkuhl, Matthias2, Author
Runge-Metzger, Artur2, Author
Affiliations:
1Potsdam Institute for Climate Impact Research, Potsdam, ou_persistent13              
2External Organizations, ou_persistent22              

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Free keywords: carbon dioxide removal, EU-ETS, social cost of carbon, climate policy, impermanence
 Abstract: This paper highlights the importance of carbon dioxide removal (CDR) technologies for climate policy. We first describe their role in iconic transformation pathways and discuss removal costs and storage duration of different technologies. Based on economic principles, we characterize optimal removal flows and reservoirs for non-permanent removals. Furthermore, we discuss different pricing regimes that achieve an optimal allocation under different information and liability conditions. Notably, seemingly cheap removal technologies in the land sector can indeed be very expensive when increasing opportunity costs and and impermanence are appropriately accounted for. The use of non-permanent removal – though to a certain extent economically optimal – creates high liability to firms and regulators that warrants a careful and deliberative risk management. Based on these insights, we discuss how policy makers can embed the CDR option in the EU’s policy architecture. There are four key tasks for regulating bodies to ensure an optimal governance: the management of the net carbon emission cap; support for research, development and diffusion of CDR technologies; certification of the quality of removals; management of the liability implied by non-permanent CDR. We propose that three new institutions, a European Carbon Central Bank, a Carbon Removal Certification Authority and a Green Leap Innovation Authority, are established to carry out these tasks.

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Language(s): eng - English
 Dates: 2023-042023-04-01
 Publication Status: Finally published
 Pages: 45
 Publishing info: München : Munich Society for the Promotion of Economic Research - CESifo
 Table of Contents: -
 Rev. Type: -
 Identifiers: Organisational keyword: Director Edenhofer
PIKDOMAIN: Director / Executive Staff / Science & Society
Organisational keyword: RD3 - Transformation Pathways
PIKDOMAIN: RD3 - Transformation Pathways
MDB-ID: No data to archive
 Degree: -

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Title: CESifo Working Papers
Source Genre: Series
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Publ. Info: -
Pages: - Volume / Issue: 10370 Sequence Number: - Start / End Page: - Identifier: -