IDEAS home Printed from https://ideas.repec.org/a/nat/natcli/v10y2020i11d10.1038_s41558-020-0880-3.html
   My bibliography  Save this article

A near-term to net zero alternative to the social cost of carbon for setting carbon prices

Author

Listed:
  • Noah Kaufman

    (Columbia University)

  • Alexander R. Barron

    (Smith College)

  • Wojciech Krawczyk

    (Joint Global Change Research Institute, University of Maryland)

  • Peter Marsters

    (Columbia University)

  • Haewon McJeon

    (Joint Global Change Research Institute, University of Maryland)

Abstract

The social cost of carbon (SCC) is commonly described and used as the optimal CO2 price. However, the wide range of SCC estimates provides limited practical assistance to policymakers setting specific CO2 prices. Here we describe an alternate near-term to net zero (NT2NZ) approach, estimating CO2 prices needed in the near term for consistency with a net-zero CO2 emissions target. This approach dovetails with the emissions-target-focused approach that frames climate policy discussions around the world, avoids uncertainties in estimates of climate damages and long-term decarbonization costs, offers transparency about sensitivities and enables the consideration of CO2 prices alongside a portfolio of policies. We estimate illustrative NT2NZ CO2 prices for the United States; for a 2050 net-zero CO2 emission target, prices are US$34 to US$64 per metric ton in 2025 and US$77 to US$124 in 2030. These results are most influenced by assumptions about complementary policies and oil prices.

Suggested Citation

  • Noah Kaufman & Alexander R. Barron & Wojciech Krawczyk & Peter Marsters & Haewon McJeon, 2020. "A near-term to net zero alternative to the social cost of carbon for setting carbon prices," Nature Climate Change, Nature, vol. 10(11), pages 1010-1014, November.
    • Handle: RePEc:nat:natcli:v:10:y:2020:i:11:d:10.1038_s41558-020-0880-3
    DOI: 10.1038/s41558-020-0880-3
    as

    Download full text from publisher

    File URL: https://www.nature.com/articles/s41558-020-0880-3
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1038/s41558-020-0880-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eoin McLaughlin & Cristián Ducoing & Les Oxley, 2024. "Tracing Sustainability in the Long Run: Genuine Savings Estimates 1850–2018," NBER Chapters, in: Measuring and Accounting for Environmental Public Goods: A National Accounts Perspective, National Bureau of Economic Research, Inc.
    2. Richard S. J. Tol, 2023. "Social cost of carbon estimates have increased over time," Nature Climate Change, Nature, vol. 13(6), pages 532-536, June.
    3. Lurdes Jesus Ferreira & Luís Pereira Dias & Jieling Liu, 2022. "Adopting Carbon Pricing Tools at the Local Level: A City Case Study in Portugal," Sustainability, MDPI, vol. 14(3), pages 1-20, February.
    4. Stern, Nicholas, 2021. "A time for action on climate change and a time for change in economics," LSE Research Online Documents on Economics 112808, London School of Economics and Political Science, LSE Library.
    5. Huwe, Vera & Krahé, Max & Sigl-Glöckner, Philippa, 2021. "Effektiv und mehrheitsfähig? Der Emissionshandel auf dem Prüfstand," Papers 277891, Dezernat Zukunft - Institute for Macrofinance, Berlin.
    6. Yang Ou & Christopher Roney & Jameel Alsalam & Katherine Calvin & Jared Creason & Jae Edmonds & Allen A. Fawcett & Page Kyle & Kanishka Narayan & Patrick O’Rourke & Pralit Patel & Shaun Ragnauth & Ste, 2021. "Deep mitigation of CO2 and non-CO2 greenhouse gases toward 1.5 °C and 2 °C futures," Nature Communications, Nature, vol. 12(1), pages 1-9, December.
    7. Jessica F. Green, 2021. "Beyond Carbon Pricing: Tax Reform is Climate Policy," Global Policy, London School of Economics and Political Science, vol. 12(3), pages 372-379, May.
    8. Pavel Tcvetkov, 2021. "Climate Policy Imbalance in the Energy Sector: Time to Focus on the Value of CO 2 Utilization," Energies, MDPI, vol. 14(2), pages 1-22, January.
    9. Jay Fuhrman & Andres F. Clarens & Haewon McJeon & Pralit Patel & Scott C. Doney & William M. Shobe & Shreekar Pradhan, 2020. "The role of negative emissions in meeting China's 2060 carbon neutrality goal," Papers 2010.06723, arXiv.org, revised Apr 2021.
    10. Burtraw, Dallas & Holt, Charles & Palmer, Karen & Shobe, William M., 2020. "Quantities with Prices: Price-Responsive Allowance Supply in Environmental Markets," RFF Working Paper Series 20-17, Resources for the Future.
    11. Nicholas Stern, 2022. "A Time for Action on Climate Change and a Time for Change in Economics," The Economic Journal, Royal Economic Society, vol. 132(644), pages 1259-1289.
    12. Best, Rohan, 2023. "Equitable reverse auctions supporting household energy investments," Energy Policy, Elsevier, vol. 177(C).
    13. Stern, Nicholas, 2022. "A time for action on climate change and a time for change in economics," LSE Research Online Documents on Economics 113456, London School of Economics and Political Science, LSE Library.
    14. Stern, Nicholas, 2021. "A time for action on climate change and a time for change in economics," LSE Research Online Documents on Economics 112802, London School of Economics and Political Science, LSE Library.
    15. Hetong Wang & Kuishuang Feng & Peng Wang & Yuyao Yang & Laixiang Sun & Fan Yang & Wei-Qiang Chen & Yiyi Zhang & Jiashuo Li, 2023. "China’s electric vehicle and climate ambitions jeopardized by surging critical material prices," Nature Communications, Nature, vol. 14(1), pages 1-13, December.
    16. Arsenii Vilkov & Gang Tian, 2023. "Blockchain’s Scope and Purpose in Carbon Markets: A Systematic Literature Review," Sustainability, MDPI, vol. 15(11), pages 1-27, May.
    17. Richard S.J. Tol, 2021. "Estimates of the social cost of carbon have not changed over time," Working Paper Series 0821, Department of Economics, University of Sussex Business School.
    18. Chmielewska Anna & Sławiński Andrzej, 2021. "Climate crisis, central banks and the IMF reform," Economics and Business Review, Sciendo, vol. 7(4), pages 7-27, December.
    19. Richard S. J. Tol, 2021. "Estimates of the social cost of carbon have increased over time," Papers 2105.03656, arXiv.org, revised Aug 2022.
    20. Hao, Xinyu & Sun, Wen & Zhang, Xiaoling, 2023. "How does a scarcer allowance remake the carbon market? An evolutionary game analysis from the perspective of stakeholders," Energy, Elsevier, vol. 280(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nat:natcli:v:10:y:2020:i:11:d:10.1038_s41558-020-0880-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.nature.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.