We are placing future generations at danger of having to cope with a big carbon debt as CO2 concentrations in the atmosphere continue to climb. Researchers at IIASA and their worldwide colleagues are pushing for prompt action to establish accountability for carbon debt by enacting carbon removal responsibilities, such as during the EU Emissions Trading Scheme’s impending amendment.
Governments have vowed to decrease global warming via agreements such as the Kyoto Protocol and the Paris Agreement during the past few decades. Despite the fact that these accords have been ratified by a vast number of nations, CO2 levels in the atmosphere continue to climb. We are well on our way to utilizing up the remaining CO2 emissions to limit temperature increase to 1.5°C over the next 10 years if we continue on our current path. If this so-called “carbon budget” is exhausted before global net-zero emissions are attained, we will have to remove one tonne of CO2 from the atmosphere later in the century for every tonne of CO2 we create beyond that point. To put it another way, if we continue on our present path, which is quite probable, we will be incurring a carbon debt.
According to the authors of a recent analysis published in Nature, an increasing number of nations’ net-zero promises already presume that a significant amount of carbon debt would need to be repaid by net negative emissions in the long run. Carbon debt may be the equivalent of 2 to 18 years of pre-COVID emissions, according to idealized global scenarios from the Intergovernmental Panel on Climate Change (IPCCSpecial )’s Report on 1.5°C Warming. If we do not achieve a 50% reduction in CO2 emissions by 2030, or if large Earth system feedbacks, such as increased emissions from permafrost melting, occur, this figure is likely to rise.
“With its newly enacted Climate Law, the European Union has committed not only to achieving net-zero greenhouse gas emissions by 2050, but also to becoming net negative beyond that, possibly reducing global carbon budget overshoot. However, this is merely a declaration at this point, as there has been no serious discussion of instruments to establish long-term responsibility for large-scale carbon dioxide removal in the political and academic debates “Johannes Bednar, lead author of the study and IIASA researcher and PhD student at Oxford University, explains.
Despite current ambitious plans to attain net-zero emissions, there is a widespread absence of strategy for repaying potentially expensive carbon debt. As a result, we face the danger of future generations being saddled with large debt, which is not only unsustainable in terms of equity, but also greatly diminishes our prospects of keeping global warming below 1.5°C in the long run. The authors believe that revenues for carbon debt repayment should be collected via carbon pricing while emissions are still in the net positive domain to ensure the feasibility of a future net negative carbon economy. The earliest conceivable moment to begin is when the carbon budget is gone, according to economic reasoning.
Carbon pricing, which includes both carbon taxes and emission trading programs, is used to collect revenue for debt repayment. Carbon taxes would require a portion of tax money to be set aside for future net negative emissions, which is akin to paying into nuclear decommissioning trust funds. Carbon taxes, on the other hand, run the danger of inadequate cash being collected in the short term via politically determined pricing to pay extremely unknown CO2 removal costs in the long run, or of savings being diverted to other political goals.
According to the report, under an optimal global emission trading plan, emission limitations would have to appropriately represent the almost exhausted carbon budget. This would entail a downward modification of presently anticipated emission ceilings for existing trading programs, such as the EU emission trading scheme. However, the resulting decrease in emission permits, which would need CO2 emissions to reach net-zero within this decade, might be offset. Corporations that continue to release huge quantities of CO2 could keep their commitment to remove an equal amount of CO2 in the future. As a result, carbon debt would be handled via what are known as carbon removal obligations, which create legal accountability for debt payments.
The default risk of carbon debtors must subsequently be addressed through emission trading programs. The authors propose that carbon debt be treated similarly to financial debt and be subjected to interest. Interest payments might be considered as a leasing price for holding CO2 in the atmosphere temporarily. However, since carbon removal commitments are tradable assets, de-risking carbon markets over time would be easier.
“Carbon removal obligations completely change how we see CO2 removals,” says IIASA researcher and study coauthor Fabian Wagner. “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.”
According to the authors, this policy solution addresses some of the present scenario literature’s major discrepancies as well as predicted long-term climate policy failures. Carbon removal requirements imply a far more equal allocation of financial flows and costs across time, rather than burdening future generations. Furthermore, in climate mitigation scenarios, a bigger portfolio of CO2 removal enabling technologies is often associated with higher carbon debt and a greater dependence on CO2 removal later in the century. Carbon debt is punished by interest payments after carbon reduction responsibilities are in place. CO2 removal, according to the authors, may assist to reduce carbon debt and related hazards if it is implemented on a significant scale in the near future, allowing for a faster route to net-zero emissions.
“Intertemporal emission trading is a concept that has been around for a while. Its critical role in dealing with net negative emissions, on the other hand, has just recently been established. Carbon-reduction commitments are, in theory, perfectly consistent with current emission-trading regimes. Nonetheless, this is uncharted area for regulators and financial institutions, and frictionless operation will only be conceivable after many years of pilot testing “Michael Obersteiner, a prominent IIASA researcher and Director of Oxford University’s Environmental Change Institute, is a coauthor. “With the carbon budget rapidly depleting, we ask for quick action to create accountability for carbon debt by enacting carbon removal responsibilities,” he concludes.