Temporary sequestration credits: an instrument for carbon bears

Kenneth M. Chomitz and Franck Lecocq ()

No 3181, Policy Research Working Paper Series from The World Bank

Abstract: Temporary crediting of carbon storage is a proposed instrument that allows entities with emissions reductions obligations to defer some obligations for a fixed period of time. This instrument provides a means of guaranteeing the environmental integrity of a carbon sequestration project. But because the user of the temporary credit takes on the liability of renewing it, or replacing it with a permanent credit, the temporary credit must sell at a discount compared with a permanent credit. The authors show that this discount depends on the expected change in price of a permanent credit. Temporary credits have value only if restrictions on carbon emissions are not expected to tighten substantially. The intuition is illustrated by assessing the value of a hypothetical temporary sulfur dioxide sequestration credit using historical data on actual sulfur dioxide allowance prices.

Keywords: Payment Systems&Infrastructure; Montreal Protocol; Banks&Banking Reform; Environmental Economics&Policies; Financial Intermediation; Environmental Economics&Policies; Carbon Policy and Trading; Montreal Protocol; Banks&Banking Reform; Insurance&Risk Mitigation (search for similar items in EconPapers)
Date: 2003-12-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... ered/PDF/WPS3181.pdf (application/pdf)

Related works:
Journal Article: Temporary sequestration credits: an instrument for carbon bears (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:3181

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().