Beyond the social cost of carbon: Negative emission technologies as a means for biophysically setting the price of carbon

Abstract

The social cost of carbon (SCC) is an estimate of the costs that society will incur because of the emission of one tonne of CO₂. Because of the large uncertainties in the effects of climate change and the subjectivity of the discount rate, estimates of SCC range widely, from - 10.2 to 105 213$ t^-1 in 2010 USD. Despite this range, the SCC has been used or proposed as a basis for a wide variety of policymaking including cost-benefit analysis and carbon taxes. The SCC suffers from several practical and philosophical weaknesses: it is anthropocentric, it neglects the acidification of oceans, it assumes that quantifiable economic variables like GDP are the primary costs that humans will experience from climate change, and it is impossible to quantify objectively. Further, the ethical implications of a carbon pricing policy include both the value of the carbon price, and the use of revenues generated by the policy. Thus, revenue neutral carbon policies as in some SCC-based proposals, are unlikely to be just. Here, we propose that the cost of emerging negative-emission technologies would be an alternative means for setting a carbon price and avoid these philosophical and practical weaknesses.

Keywords: Climate justice; Externality; Negative emission technology; Polluter pays principle; Social cost of carbon.

Fig. 1

Diagrammatic depiction of IAMs. Modified from National Academies 2017

Fig. 2

Histogram of SCC estimates. Data from (Tol 2018)

Fig. 3

Emissions in the RCP 1.9 and 2.6 scenarios. Data from CMIP6

Fig. 4

Optimistic (top) and pessimistic (bottom) marginal cost curves for NETs

Fig. 5

Difference between SCC- and NET-based carbon pricing policies. In (a) contemporary human emissions negatively impact future environmental systems decreasing the flow of ecosystem services to future economies. This damage is monetized and discounted to estimate the SCC (gold circle). In NET-based policy (b), the carbon price is determined by the costs to remove carbon from the atmosphere before it negatively impacts environmental systems (gold circle)