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

Noah Kaufman (), Alexander R. Barron, Wojciech Krawczyk, Peter Marsters and Haewon McJeon
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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

Nature Climate Change, 2020, vol. 10, issue 11, 1010-1014

Abstract: 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.

Date: 2020
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DOI: 10.1038/s41558-020-0880-3

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