Temporary Sequestration Credits : An Instrument for Carbon Bears
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 integ...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2003/12/2859419/temporary-sequestration-credits-instrument-carbon-bears http://hdl.handle.net/10986/17430 |
| Summary: | 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. |
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