Thanks for the vivid description on the cost of carbon. However the reason to buy expensive durable carbor removal is to Kickstart technologies that will become cheap in future. it has very little to do with how many tons are removed today and all about supporting R&D and development of new Solutions.
The funding Robert mentions helps to solve exactly that problem - make it affordable in the longer-term. It's more than just a research project here and there by scaling actual solutions that remove CO2 today. By starting on this path now we can scale the solutions that we'll need in the 2030's and 2040's on a much larger scale.
If we believe that the excess of atmospheric CO2 is a crisis, then there is also a shortage of avoided CO2 on the planet. We want its price to be higher to disincent atmospheric CO2 and incent avoidance. The only reason to limit the price is political: adjustment is hard.
The forests-carbon hypothesis is that economies can be built right now (e.g. in California’s testbed for doing things right, Sierra County) that expresses prices in Tonnes Avoided CO2 (TAC). Forests carbon is an asset on the books of the Forests Bank, which forms the base capital of the bank. The economy maximizes EV(TAC), by financing actions to increase EV(TAC),
There is another set of answers to “what is carbon pricing?”
A carbon price gives $/TAC, which is an exchange rate between a carbon economy and a dollar economy.
Carbon pricing gives things like TAC/(unit of good): it is the pricing system that gives the best response to the carbon crisis.
Quico- a beautiful insightful piece, as always. My job is to point out what you missed.
Who is going to be the buyer in the carbon market you're discussing?
The 'market' price for carbon removal currently in the voluntary market is just a PR campaign for well meaning companies like Microsoft. That's not a bad thing, but as you say, a PR campaign is not a market.
A real market has buyers who will spend money to benefit from the product being sold. That doesn't exist in the carbon removal market. They only major buyers for CO2 are oil companies who use it for "enhanced oil recovery" (EOR) from old wells, and for refineries. That market is tiny, about 1/1000 of what's needed to impact CO2 levels, and the oil companies have recently bought DAC companies to supply them with the needed CO2. Thus that market is irrelevant.
Who is going to be the buyer in the carbon market you're discussing?
Quico knows my answer: Families have a stake in the flourishing of their children. Wealthy families, often called family offices, have the funds and skills to make it happen. We need to establish a market around their, and our, desire for restoring a safe climate for humanity flourishing. Who else can justify spending the needed money?
I'm not sure why you think it's an issue that different jurisdictions have their own carbon price. In general a high carbon price (the price of an emission allowance) reflects the strength of the ETS (i.e., the steepness that the cap declines and the relative scarcity of allowances), the markets trust in the governments commitment, and the marginal abatement cost curve.
The argument for a global price centres on its role as a collective commitment tool, incentivising global participation and cooperation. In facing the same carbon price constraint, so the argument goes, countries would also allocate resources more efficiently. But that wouldn't work for the same reason that a global currency wouldn't work either. There is no single carbon price that would work for everybody. The beauty of emissions trading schemes is that they control for emissions and let the market react by setting the appropriate price to that jurisdiction.
Lastly, you mention CDR and the need to scale markets. Well that's exactly what the EU are hoping to do by incorporating CDR into the EU ETS or as a standalone market mechanism.
Great article - btw…New Zealand has a mechanism that incorporates removal (carbon sequestration via forestry) in an ETS - but that has created a separate and additional set of issues - so your overall thesis remains entirely intact!
Thanks for the vivid description on the cost of carbon. However the reason to buy expensive durable carbor removal is to Kickstart technologies that will become cheap in future. it has very little to do with how many tons are removed today and all about supporting R&D and development of new Solutions.
If CO2 removal tech is expensive, then it will never solve the problem. The only way it works is if it can become a product with actual value.
Funding a research project fine, funding scaling has a pretty terrible track record and it creates subsidy farming lobbies.
The funding Robert mentions helps to solve exactly that problem - make it affordable in the longer-term. It's more than just a research project here and there by scaling actual solutions that remove CO2 today. By starting on this path now we can scale the solutions that we'll need in the 2030's and 2040's on a much larger scale.
Do whatever you want. Just don’t ask me to pay for it.
If we believe that the excess of atmospheric CO2 is a crisis, then there is also a shortage of avoided CO2 on the planet. We want its price to be higher to disincent atmospheric CO2 and incent avoidance. The only reason to limit the price is political: adjustment is hard.
The forests-carbon hypothesis is that economies can be built right now (e.g. in California’s testbed for doing things right, Sierra County) that expresses prices in Tonnes Avoided CO2 (TAC). Forests carbon is an asset on the books of the Forests Bank, which forms the base capital of the bank. The economy maximizes EV(TAC), by financing actions to increase EV(TAC),
There is another set of answers to “what is carbon pricing?”
A carbon price gives $/TAC, which is an exchange rate between a carbon economy and a dollar economy.
Carbon pricing gives things like TAC/(unit of good): it is the pricing system that gives the best response to the carbon crisis.
Quico- a beautiful insightful piece, as always. My job is to point out what you missed.
Who is going to be the buyer in the carbon market you're discussing?
The 'market' price for carbon removal currently in the voluntary market is just a PR campaign for well meaning companies like Microsoft. That's not a bad thing, but as you say, a PR campaign is not a market.
A real market has buyers who will spend money to benefit from the product being sold. That doesn't exist in the carbon removal market. They only major buyers for CO2 are oil companies who use it for "enhanced oil recovery" (EOR) from old wells, and for refineries. That market is tiny, about 1/1000 of what's needed to impact CO2 levels, and the oil companies have recently bought DAC companies to supply them with the needed CO2. Thus that market is irrelevant.
Who is going to be the buyer in the carbon market you're discussing?
Quico knows my answer: Families have a stake in the flourishing of their children. Wealthy families, often called family offices, have the funds and skills to make it happen. We need to establish a market around their, and our, desire for restoring a safe climate for humanity flourishing. Who else can justify spending the needed money?
I'm not sure why you think it's an issue that different jurisdictions have their own carbon price. In general a high carbon price (the price of an emission allowance) reflects the strength of the ETS (i.e., the steepness that the cap declines and the relative scarcity of allowances), the markets trust in the governments commitment, and the marginal abatement cost curve.
The argument for a global price centres on its role as a collective commitment tool, incentivising global participation and cooperation. In facing the same carbon price constraint, so the argument goes, countries would also allocate resources more efficiently. But that wouldn't work for the same reason that a global currency wouldn't work either. There is no single carbon price that would work for everybody. The beauty of emissions trading schemes is that they control for emissions and let the market react by setting the appropriate price to that jurisdiction.
Lastly, you mention CDR and the need to scale markets. Well that's exactly what the EU are hoping to do by incorporating CDR into the EU ETS or as a standalone market mechanism.
Great article - btw…New Zealand has a mechanism that incorporates removal (carbon sequestration via forestry) in an ETS - but that has created a separate and additional set of issues - so your overall thesis remains entirely intact!
If a scheme requires global government, I will fight to the death to stop it…