I'm all for this, BUT if we're going to restructure the whole carbon market, maybe we could design in some liquidity? What if we treated long-duration removals like a yield-bearing asset instead of a one-off expense? What would a liquid market for ‘permanence-premium’ CO₂ look like—something that appreciates (or at least prices) over time the way a bond or a futures strip does? Maybe this would shift carbon from a cost to an investible asset that might make money the better we get at it.
You could easily imagine a security that pays the Ton-Year price on the year it actually happens, which would provide steady cash-flow to the carbon capturer. That security would be tradable, of course, with the ton-year payment acting as a kind of coupon. It'd be a sort of upside-down bond, though in that the coupon payment would flow from the security holder to the issuer, not the other way around.
I'm not a finance dood, but I'm sure a roomful of them could make this work.
It's D00d, dude. Zeros are valuable, especially in the denominator,.
And it's Tonnes. Dammit. Metric usage, metric spelling. As in Tonnes Avoided C02 (what you propose, plausibly to at least this ignorant D00d, to grow in the non-Sargossan gyres), or its accounting inverse, Tonnes Atmospheric CO2, which is what is in the CO2 emissions rows and columns of the input-output table, a part of the System of National Accounts, built from samples by the Survey of Current Business.
This Finance D00d says Get The Fucking Prices Right.
I was a Crisis Pricing D00d once upon a time. There is actually crisis pricing theory and practice, in the electric power industry.
An implication of this theory is that that Getting The Fucking Prices Right means Carbon Footprint Pricing for *everything*, rather than for *Nothing* as is current practice among the unwashed dudes and dudettes, including on this Substack and many others. "Prices" is plural. What you all call carbon pricing involves what us International Trade and Finance Doods (D00ds, dude) call an exchange rate between two sets of pricing systems, such as the Dollars/TAC systems.
I'll get off your page if you all don't want a little Finance D00d edumication, which is not hard but is necessary for any correct economic analysis of the problem.
If you had a tiny bit of math you would recognize that you get Carbon Footprint Pricing ("Carbon Pricing" would be convenient if you all hadn't pre-empted a really good term for an inappropriate use) as the limit when the Dollar/TAC exchange rate goe to infinite, which is the very definition of Crisis Pricing.
I apologize for yelling, but incorrect spelling of units of measure REALLY TICKS ME OFF.
Tonnes.
And Carbon Pricing really has to mean the TAC price for good.
This is very good news for every single scheme for shifting from TAtmosC to TAvoidedC. The Gyre Guy, and many others, are in the business of creating value directly.
You'll get there eventually, with or without me. If you want "with me," comp me a subscription and ask me to contribute. Or figure it out yourself. This is something even people as uncreative as engineers can get their heads around it. It's not rocket science. It's way easier.
We wanted to do this at Nori, where we would guarantee 10 years per NRT (our carbon tonne unit, "Nori Removal Tonne") for soil carbon, and would say if you want 100 years of permanance, then buy 10 NRTs today. Eventually the pushback was too strong from the crowd who were (with valid evidence and arguments) saying that if you are going to offset 1 tonne of fossil emissions today, that 1 tonne of CO2 will have a forcing effect for 1000 years, and therefore you should offset with like for like only. And then the John Oliver bit about NCX came out, and that pretty much killed the concept among the carbonati. But I still think it's a valid approach.
This is not a problem in an accounting system denominated in TAC.
@Quico Toro is debiting the account of the oceanic carbon sink. He has three projects, one that lasts for one year, another for ten, a third for 100.
Each of these projects, on the books, has a credit, as the initial project decays to zero. This is easy financial math. We did not cover it in my lower-division accounting class, but then that was before most of us had discovered the value in CO2 avoidance.
TAC is a pricing system. The measurement of the volumes to which it applies is an accounting problem. A challenge for the oceanic carbon sink is that it is harder to audit than some other sinks. So it is not as powerful, from a commercial standpoint as an asset against which one can borrow than some other capture technologies (forests!!). But just as good for the objective, of TAC optimization.
If I am the Forest Bank, the oceanic solutions are definitely things I want to invest in, using the cash (today’s Dollars) I can attract because of the financial power of auditable physical reserves. Through time and investment in R&D, the financial power of the Ocean Bank grows as we get a good handle on decay rates and otherwise learn to put the right Notes on the balance sheet.
Rock on, Quico. The carbon economy “likes” fertilizing the desert of the gyres, and finds your interest in decay to be general.
For example, one of the longer-term aspects of the forests-carbon program is the duration of the post-tree-death root carbon, whose decay rate decreases with the age of the tree at death. I guess.
Interesting. Although, I would think that a ton of carbon sequestered in 2125 would be worth much more than a ton today in theoretical impact value reduced. Unfortunately whatever number gets picked would be highly political.
Sorry to interrupt your party, your disco, your fooling around.
You wanna talk carbon crisis, I got sicced on the case back in 1985, when the relevant senior scientific staff at the National Science Foundation sat me and my boss down for a little chat, that ended with this:
"Young man, if when you get to my age the climate crisis isn't keeping you awake nights, you will have taken a wrong turn in life."
No, I am no fun at all. Having fun, tho', in spite of difficulty sleeping through the crisis.
Just remember, it's Tonnes Avoided CO2 as an asset, Tonnes Atmospheric CO2 as an expense, and the sum of the Avoidances and the Atmospherics is a constant. And Carbon Pricing is a system, where a carbon price of, for example, a peanut butter sandwich is built up from the carbon price of the peanut butter and the bread.
Yeah, I clear 'em out by teaching accounting to the economists, economics to the accountants, and yelling at asshole engineers who overestimate their technical competence.
Hey man, you've spammed the comments section with your metric tirade 4 times. Please chill it with no more than ONE complaint next time so that it's easier to follow the substantial arguments instead of seeing you explain that you could have been confused (but weren't) again and again.
Not sure where I explained how I could have been confused.
The question of how to spell a unit of measure seems trivial. OK. I am annoying. Clearly. But the practice of applying straightforward accounting principles, the kind that they study as undergraduates in many engineering programs and in what used to be called forestry, and even in some economics programs (not!!! in mine at Berkeley, I took it for fun), to the greatest challenge of our lifetimes, is essential. Man.
I prefer Old Man, or D00d (those are zeroes, it’s a silly gag from the old days of the internet before we used fonts that didn’t distinguish from the letter O).
Boss man doesn’t like me scribbling red lines all over this comments section, he is welcome to either fix his usage or tell me to cut it out. You, I will mock. Child.
Again, please, tonnes. Here in the forests of the Washoe Country ("Northern Sierra") we beg the rest of you to get with the metric system. Or if you insist on using "ton" please specify US Ton or Short Ton (2000 "pounds") or Imperial (Long) Ton (2200 "pounds'). I have found the Tonne, 1000 Kilograms, to be easier for envelope math.
,
Today's "carbon price," in $/TAC or other currency unit (Pounds/Tonne!!!) can be understood as an exchange rate between a TAC-optimizing economy and one that optimizes Dollars or Pounds or Rupiyah or whatever.
In the carbon economy everything is priced in TAC/unit.
In an accounting system (e.g. national accounts, but it is built up from company accounts) the carbon price of any good can be found from the input-output table by recasting the table in TAC terms. So an electric power input, into Many Things, kwh/unit, has a carbon input, TAC/kwh (where being an expense this is Tonnes Atmospheric CO2), which feeds into the TAC price of the final goods, TAC/unit.
The $/TAC exchange rate is indeed a policy variable, that allows the non-carbon economy to survive while shrinking. We retain it as a lesson from the failures of the European Union, which did not allow countries like Greece a separate monetary policy from countries like Germany. But in the climate crisis we want it to rise as fast as politically possible.
We the Forests Carbon Bank know how to help. It is in our narrow (jobs!!) interest as well as essential to Earth to loosen the political constraint to allow the prices faced by humans to most closely reflect the technical conditions of TAC optimization.
Welcome, children, to the Political Economy of Forests in the Climate Crisis.
I'm all for this, BUT if we're going to restructure the whole carbon market, maybe we could design in some liquidity? What if we treated long-duration removals like a yield-bearing asset instead of a one-off expense? What would a liquid market for ‘permanence-premium’ CO₂ look like—something that appreciates (or at least prices) over time the way a bond or a futures strip does? Maybe this would shift carbon from a cost to an investible asset that might make money the better we get at it.
You could easily imagine a security that pays the Ton-Year price on the year it actually happens, which would provide steady cash-flow to the carbon capturer. That security would be tradable, of course, with the ton-year payment acting as a kind of coupon. It'd be a sort of upside-down bond, though in that the coupon payment would flow from the security holder to the issuer, not the other way around.
I'm not a finance dood, but I'm sure a roomful of them could make this work.
It's D00d, dude. Zeros are valuable, especially in the denominator,.
And it's Tonnes. Dammit. Metric usage, metric spelling. As in Tonnes Avoided C02 (what you propose, plausibly to at least this ignorant D00d, to grow in the non-Sargossan gyres), or its accounting inverse, Tonnes Atmospheric CO2, which is what is in the CO2 emissions rows and columns of the input-output table, a part of the System of National Accounts, built from samples by the Survey of Current Business.
This Finance D00d says Get The Fucking Prices Right.
I was a Crisis Pricing D00d once upon a time. There is actually crisis pricing theory and practice, in the electric power industry.
An implication of this theory is that that Getting The Fucking Prices Right means Carbon Footprint Pricing for *everything*, rather than for *Nothing* as is current practice among the unwashed dudes and dudettes, including on this Substack and many others. "Prices" is plural. What you all call carbon pricing involves what us International Trade and Finance Doods (D00ds, dude) call an exchange rate between two sets of pricing systems, such as the Dollars/TAC systems.
I'll get off your page if you all don't want a little Finance D00d edumication, which is not hard but is necessary for any correct economic analysis of the problem.
If you had a tiny bit of math you would recognize that you get Carbon Footprint Pricing ("Carbon Pricing" would be convenient if you all hadn't pre-empted a really good term for an inappropriate use) as the limit when the Dollar/TAC exchange rate goe to infinite, which is the very definition of Crisis Pricing.
I apologize for yelling, but incorrect spelling of units of measure REALLY TICKS ME OFF.
Tonnes.
And Carbon Pricing really has to mean the TAC price for good.
This is very good news for every single scheme for shifting from TAtmosC to TAvoidedC. The Gyre Guy, and many others, are in the business of creating value directly.
You'll get there eventually, with or without me. If you want "with me," comp me a subscription and ask me to contribute. Or figure it out yourself. This is something even people as uncreative as engineers can get their heads around it. It's not rocket science. It's way easier.
Good luck, and see you around.
Dude.
Karen YES!
You just nailed the core of the forests-carbon proposition.
We wanted to do this at Nori, where we would guarantee 10 years per NRT (our carbon tonne unit, "Nori Removal Tonne") for soil carbon, and would say if you want 100 years of permanance, then buy 10 NRTs today. Eventually the pushback was too strong from the crowd who were (with valid evidence and arguments) saying that if you are going to offset 1 tonne of fossil emissions today, that 1 tonne of CO2 will have a forcing effect for 1000 years, and therefore you should offset with like for like only. And then the John Oliver bit about NCX came out, and that pretty much killed the concept among the carbonati. But I still think it's a valid approach.
Tonnes please. Ton is ambiguous and obsolete.
This is not a problem in an accounting system denominated in TAC.
@Quico Toro is debiting the account of the oceanic carbon sink. He has three projects, one that lasts for one year, another for ten, a third for 100.
Each of these projects, on the books, has a credit, as the initial project decays to zero. This is easy financial math. We did not cover it in my lower-division accounting class, but then that was before most of us had discovered the value in CO2 avoidance.
TAC is a pricing system. The measurement of the volumes to which it applies is an accounting problem. A challenge for the oceanic carbon sink is that it is harder to audit than some other sinks. So it is not as powerful, from a commercial standpoint as an asset against which one can borrow than some other capture technologies (forests!!). But just as good for the objective, of TAC optimization.
If I am the Forest Bank, the oceanic solutions are definitely things I want to invest in, using the cash (today’s Dollars) I can attract because of the financial power of auditable physical reserves. Through time and investment in R&D, the financial power of the Ocean Bank grows as we get a good handle on decay rates and otherwise learn to put the right Notes on the balance sheet.
Rock on, Quico. The carbon economy “likes” fertilizing the desert of the gyres, and finds your interest in decay to be general.
For example, one of the longer-term aspects of the forests-carbon program is the duration of the post-tree-death root carbon, whose decay rate decreases with the age of the tree at death. I guess.
Interesting. Although, I would think that a ton of carbon sequestered in 2125 would be worth much more than a ton today in theoretical impact value reduced. Unfortunately whatever number gets picked would be highly political.
Wow, you must be tons of fun at parties.
Are you talking to me? If so, say so.
Sorry to interrupt your party, your disco, your fooling around.
You wanna talk carbon crisis, I got sicced on the case back in 1985, when the relevant senior scientific staff at the National Science Foundation sat me and my boss down for a little chat, that ended with this:
"Young man, if when you get to my age the climate crisis isn't keeping you awake nights, you will have taken a wrong turn in life."
No, I am no fun at all. Having fun, tho', in spite of difficulty sleeping through the crisis.
Just remember, it's Tonnes Avoided CO2 as an asset, Tonnes Atmospheric CO2 as an expense, and the sum of the Avoidances and the Atmospherics is a constant. And Carbon Pricing is a system, where a carbon price of, for example, a peanut butter sandwich is built up from the carbon price of the peanut butter and the bread.
Yeah, I clear 'em out by teaching accounting to the economists, economics to the accountants, and yelling at asshole engineers who overestimate their technical competence.
No Fun.
Hey man, you've spammed the comments section with your metric tirade 4 times. Please chill it with no more than ONE complaint next time so that it's easier to follow the substantial arguments instead of seeing you explain that you could have been confused (but weren't) again and again.
Not sure where I explained how I could have been confused.
The question of how to spell a unit of measure seems trivial. OK. I am annoying. Clearly. But the practice of applying straightforward accounting principles, the kind that they study as undergraduates in many engineering programs and in what used to be called forestry, and even in some economics programs (not!!! in mine at Berkeley, I took it for fun), to the greatest challenge of our lifetimes, is essential. Man.
I prefer Old Man, or D00d (those are zeroes, it’s a silly gag from the old days of the internet before we used fonts that didn’t distinguish from the letter O).
Boss man doesn’t like me scribbling red lines all over this comments section, he is welcome to either fix his usage or tell me to cut it out. You, I will mock. Child.
Again, please, tonnes. Here in the forests of the Washoe Country ("Northern Sierra") we beg the rest of you to get with the metric system. Or if you insist on using "ton" please specify US Ton or Short Ton (2000 "pounds") or Imperial (Long) Ton (2200 "pounds'). I have found the Tonne, 1000 Kilograms, to be easier for envelope math.
,
Today's "carbon price," in $/TAC or other currency unit (Pounds/Tonne!!!) can be understood as an exchange rate between a TAC-optimizing economy and one that optimizes Dollars or Pounds or Rupiyah or whatever.
In the carbon economy everything is priced in TAC/unit.
In an accounting system (e.g. national accounts, but it is built up from company accounts) the carbon price of any good can be found from the input-output table by recasting the table in TAC terms. So an electric power input, into Many Things, kwh/unit, has a carbon input, TAC/kwh (where being an expense this is Tonnes Atmospheric CO2), which feeds into the TAC price of the final goods, TAC/unit.
The $/TAC exchange rate is indeed a policy variable, that allows the non-carbon economy to survive while shrinking. We retain it as a lesson from the failures of the European Union, which did not allow countries like Greece a separate monetary policy from countries like Germany. But in the climate crisis we want it to rise as fast as politically possible.
We the Forests Carbon Bank know how to help. It is in our narrow (jobs!!) interest as well as essential to Earth to loosen the political constraint to allow the prices faced by humans to most closely reflect the technical conditions of TAC optimization.
Welcome, children, to the Political Economy of Forests in the Climate Crisis.
Timber-r-r-r-r!