Alternative carbon price trajectories can avoid excessive carbon removal

Area of Science:

• Climate Science
• Environmental Economics

Background:

• Most climate mitigation scenarios aiming for below 2°C warming rely on significant carbon dioxide removal (CDR).
• These scenarios often assume an exponentially increasing carbon price, considered economically optimal for meeting carbon budgets.

Purpose of the Study:

• To re-evaluate carbon price trajectories in light of available carbon dioxide removal (CDR).
• To analyze how optimal carbon pricing can reduce CDR demand and economic effort for climate change mitigation.

Main Methods:

• Economic modeling of climate mitigation pathways.
• Analysis of carbon price dynamics under different CDR assumptions.

Main Results:

• The assumption of a steadily filled carbon budget is challenged by the availability of net carbon removals.
• Optimal carbon pricing can significantly lower long-term economic effort and CDR deployment for staying below 2°C warming.
• A strategy of high initial carbon prices followed by slower increases post-carbon neutrality is identified as more efficient.

Conclusions:

• Climate mitigation economics require revised carbon price pathways that account for CDR.
• Implementing higher initial carbon prices can lead to more feasible and less risky climate change mitigation strategies.
• Reduced reliance on CDR and lower long-term economic costs are achievable with optimized carbon pricing.