The Social Value of Temporary Carbon Removals and Delayed Emissions

An economic approach to calculating the social value of temporary reductions (SVTR) in atmospheric carbon is discussed. The SVTR allows different carbon removal projects to be prioritized in a way that maximizes welfare and establishes equivalence between temporary, risky removals with permanent ones in terms of avoided welfare losses from climate damages. The approach is compared with previous attempts in the physical and natural sciences and economics to price temporary emissions reductions, none of which successfully integrate economics and climate science. Applications of the SVTR exist in public project appraisal, life cycle analysis, pricing carbon debts, and determining short-term carbon credit and offset contracts. Criticisms of equivalence are shown to be special cases of our integrated economic approach. Temporary removals provide transitory cooling benefits and, if repeated, are equivalent to permanent solutions. They also can have permanent effects via learning by doing or reducing the likelihood of tipping points. The SVTR helps determine how temporary removals can fit into an efficient response to climate. Ruling out temporary removals and equivalence, and the intertemporal transfers that they imply, could unnecessarily tie the hands of policy makers.