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

Author

Listed:
  • Ottmar Edenhofer
  • Max Franks
  • Matthias Kalkuhl
  • Artur Runge-Metzger

Abstract

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.

Suggested Citation

  • Ottmar Edenhofer & Max Franks & Matthias Kalkuhl & Artur Runge-Metzger, 2024. "On the Governance of Carbon Dioxide Removal - A Public Economics Perspective," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 80(1), pages 70-110.
    • Handle: RePEc:mhr:finarc:urn:doi:10.1628/fa-2023-0012
    DOI: 10.1628/fa-2023-0012
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    More about this item

    Keywords

    personal in cometax; distributional tax analysis; data matching; carbon dioxide removal; EU-ETS; social cost of carbon; climate policy; impermanence;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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