Dealing with global carbon debt
Date:
July 8, 2021
Source:
International Institute for Applied Systems Analysis
Summary:
As atmospheric concentrations of carbon dioxide continue to rise,
we are putting future generations at risk of having to deal with a
massive carbon debt. Researchers are calling for immediate action
to establish responsibility for carbon debt by implementing carbon
removal obligations, for example, during the upcoming revision of
the EU Emissions Trading Scheme.
FULL STORY ==========================================================================
As atmospheric concentrations of CO2 continue to rise, we are putting
future generations at risk of having to deal with a massive carbon
debt. IIASA researchers and international colleagues are calling
for immediate action to establish responsibility for carbon debt by implementing carbon removal obligations, for example, during the upcoming revision of the EU Emissions Trading Scheme.
==========================================================================
Over the last several decades, governments have collectively pledged to
slow global warming through accords such as the Kyoto Protocol and the
Paris Agreement. Despite the ratification of these agreements by a large
number of countries, the atmospheric concentration of CO2 continues to
rise. At the rate we are going, we are well on our way to using up the remaining quantity of CO2 emissions to limit temperature rise to 1.5DEGC approximately within the next ten years. If this so called 'carbon budget' becomes depleted before net-zero emissions are achieved globally, we will
have to remove one tonne of CO2 from the atmosphere later in the century
for every additional tonne of CO2 that we emit after this point. In other words, if we continue on our current trajectory -- which is very likely
to be the case -- we will be building up a carbon debt.
The authors of a new study just published in Nature point out that
the net-zero pledges made by a growing number of countries in fact
already assume that a substantial amount of carbon debt will need to be compensated for by net negative emissions in the long-term. Idealized
global scenarios from the Intergovernmental Panel on Climate Change
(IPCC)'s Special Report on 1.5 DEGC Warming, for instance, suggest that
carbon debt could amount to the equivalent of 2 to 18 years of pre-COVID emissions. This amount is bound to increase if we do not manage to cut
CO2 emissions by roughly 50% by 2030, or if significant Earth system
feedbacks, such as additional emissions from permafrost melting, occur.
"With its recently adopted Climate Law, the European Union not only
decided to reach net-zero greenhouse gas emissions by 2050, but already
for going net negative thereafter, potentially helping to bring down
global carbon budget overshoot. However, so far this is not more than a declaration, since any serious discussion on instruments to establish
long-term responsibility for large-scale carbon dioxide removal is
missing, both from the political and the academic debate," explains
IIASA researcher and PhD student at Oxford University, Johannes Bednar,
the lead author of the study.
Despite the existing ambitious agendas to achieve net-zero emissions,
there is generally a lack of strategy to repay potentially costly carbon
debt. By implication, we risk that future generations will end up with
massive debt, which is not only questionable from an equity perspective
but also significantly reduces our chances to limit warming to 1.5DEGC
in the long-run.
To assure the viability of a future net negative carbon economy, the
authors argue that funds for carbon debt repayment need to be collected
through carbon pricing while emissions are still in the net positive
domain. Economic logic dictates that the latest possible time to start
doing that is when the carbon budget becomes depleted.
Using carbon pricing to collect funds for carbon debt repayment works
through both carbon taxes and emission trading schemes. For carbon taxes,
a fraction of tax revenues would need to be earmarked for future net
negative emissions, which is in some ways similar to paying into trust
funds for nuclear decommissioning. Carbon taxes, however, carry the
risk that insufficient funding is collected in the near-term through politically set prices for covering highly uncertain CO2 removal costs
far in the future; or that savings are appropriated for other political purposes.
The study shows that in the case of an idealized global emission
trading scheme, emission caps would accurately have to reflect the almost-depleted carbon budget. For existing trading schemes, like the
EU emission trading scheme, this would imply a downward correction of
currently scheduled emission caps. The resultant reduction of emission allowances, which would require CO2 emissions to fall to net-zero within
this decade, could, however, be compensated. Corporations that continue
to emit large amounts of CO2 would be able to hold on to an obligation
to remove an equivalent quantity of CO2 in the future. Carbon debt would consequently be managed through so-called carbon removal obligations,
which establish legal responsibility for carbon debt repayment.
Emission trading schemes then need to start dealing with the default risk
of carbon debtors. The authors suggest this could be addressed by treating carbon debt like financial debt by imposing interest on it. Interest
payments can be viewed as a rental fee for temporarily storing CO2 in
the atmosphere. However, because carbon removal obligations are tradeable assets, this would facilitate de-risking carbon markets over time.
"Carbon removal obligations completely change how we see CO2 removals:
from magical tools to enable a 30-year long period of the grand
atmospheric restoration project, to a technology option that is developed
and tested today and flexibly and more incrementally scaled throughout
the 21st century and possibly beyond," notes IIASA researcher and study coauthor Fabian Wagner.
According to the authors, this policy proposal resolves some of the
large inconsistencies of the current scenario literature and foreseeable long-run climate policy failures. Instead of overburdening future
generations, carbon removal obligations imply a much more equitable distribution of financial flows and costs over time. Moreover, in
climate mitigation scenarios a larger portfolio of CO2 removal enabling technologies usually goes hand in hand with increased carbon debt and
a large reliance on CO2 removal later in the century.
With carbon removal obligations in place, carbon debt is penalized through interest payments. In this case, the authors say, CO2 removal helps to
minimize carbon debt and associated risks if it is rolled-out at large
scale in the near-term to facilitate a more rapid path to net-zero.
"The idea of intertemporal emission trading has been around for some time.
However, its crucial importance for dealing with net negative emissions
has only now been discovered. Carbon removal obligations are in principle
fully compatible with existing emission trading schemes. Nevertheless,
for regulators and financial institutions this marks new territory,
and frictionless operation will only be possible after some years
of pilot testing," says coauthor Michael Obersteiner, a senior IIASA
researcher and Director of the Environmental Change Institute at Oxford University. "With the rapid depletion of the carbon budget, we therefore
call for immediate action to establish responsibility for carbon debt
by implementing carbon removal obligations," he concludes.
========================================================================== Story Source: Materials provided by International_Institute_for_Applied_Systems_Analysis.
Note: Content may be edited for style and length.
========================================================================== Journal Reference:
1. Johannes Bednar, Michael Obersteiner, Artem Baklanov, Marcus
Thomson,
Fabian Wagner, Oliver Geden, Myles Allen, Jim
W. Hall. Operationalizing the net-negative carbon economy. Nature,
2021; DOI: 10.1038/s41586-021- 03723-9 ==========================================================================
Link to news story:
https://www.sciencedaily.com/releases/2021/07/210708135359.htm
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