Experts at Columbia University’s Earth Institute have developed a model for pricing carbon that will help the world meet net-zero climate change targets. The “Near-term to Net Zero” approach is a method of setting carbon prices that will ensure net-zero emissions goals are met.
Net-zero emissions is the point at which the overall balance between emissions released and emissions removed from the atmosphere equals zero.
Carbon prices are established to encourage the reduction of CO2 emissions. The most crucial aspect of a carbon pricing policy is determining how much to charge per ton of emissions.
Up until now, economists have focused on the social cost of carbon to calculate carbon prices. The idea is that it balances the benefits and costs of emissions reductions.
However, the Columbia researchers argue that the social cost of carbon cannot be estimated accurately enough to provide any practical value to policymakers for setting carbon prices.
The Near-term to Net Zero approach uses reliable information that we have now and avoids using uncertain future changes. The method estimates the carbon prices needed for a net-zero emissions target.
Study lead author Noah Kaufman is a research scholar at the Center on Global Energy Policy.
“The social cost of carbon is a useful concept, but the risks of climate change are far too complex for credible comprehensive damage estimates,” said Kaufman.
“Near-term to Net Zero enables policymakers to use both climate science and economics to chart an effective and efficient pathway to net-zero emissions.”
The estimates for Near-term to Net Zero carbon prices in 2025 are $32, $52 and $93 per metric ton for net-zero targets in 2060, 2050, and 2040, respectively.
Professor Jason Bordoff is the founding director of the Center on Global Energy Policy.
“There’s no debate about the fact that climate change is happening now, and reducing our contribution to a warming planet is critical to our efforts to avoid the worst impacts of climate change,” said Professor Bordoff.
“This important research gives us another tool in the toolbox to figure out how we can get to net-zero as quickly as possible, and no later than 2050, by setting a price on carbon that, along with complementary policies, discourages continued pollution and creates incentives for innovation to deliver the clean energy the world needs.”
The study is published in the journal Nature Climate Change.