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Journal Article

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


Edenhofer,  Ottmar
Potsdam Institute for Climate Impact Research;


Franks,  R. Maximilian
Potsdam Institute for Climate Impact Research;

Kalkuhl,  Matthias
External Organizations;

Runge-Metzger,  Artur
External Organizations;

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Edenhofer, O., Franks, R. M., Kalkuhl, M., Runge-Metzger, A. (2024): On the Governance of Carbon Dioxide Removal – A Public Economics Perspective. - FinanzArchiv - Public Finance Analysis, 80, 1, 70-110.

Cite as: https://publications.pik-potsdam.de/pubman/item/item_29757
Climate policy increasingly requires carbon dioxide removal (CDR). We describe its role, characterize optimal flows for non-permanent removals and describe optimal pricing regimes under different information and liability conditions. Non-permanent removal – though to a certain extent optimal – creates liabilities that warrant careful risk management. Thus, seemingly cheap land-based technologies can become expensive. We discuss possibilities for integrating CDR in the EU policy architecture and define four tasks: managing the emission cap; R&D support; quality certification of removals; management of liabilities from non-permanent CDR. We propose three institutions for these tasks: a European Carbon Central Bank, a Carbon Removal Certification Authority and a Green Leap Innovation Authority.