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Journal Article

Who Is Paying for Carbon Dioxide Removal? Designing Policy Instruments for Mobilizing Negative Emissions Technologies


Honegger,  Matthias
IASS Institute for Advanced Sustainability Studies Potsdam;

Poralla,  Matthias
External Organizations;

Michaelowa,  Axel
External Organizations;

Ahonen,  Hanna-Mari
External Organizations;

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Honegger, M., Poralla, M., Michaelowa, A., Ahonen, H.-M. (2021): Who Is Paying for Carbon Dioxide Removal? Designing Policy Instruments for Mobilizing Negative Emissions Technologies. - Frontiers in climate, 3, 672996.

Cite as: https://publications.iass-potsdam.de/pubman/item/item_6001123
Carbon dioxide removal (CDR) poses a significant and complex public policy challenge in the long-term. Presently treated as a marginal aspect of climate policy, addressing CDR as a public good is quickly becoming essential for limiting warming to well below 2 or 1.5°C by achieving net-zero emissions in time – including by mobilization of public and private finance. In this policy and practice review, we develop six functions jointly needed for policy mixes mobilizing CDR in a manner compatible with the Paris Agreement's objectives. We discuss the emerging CDR financing efforts in light of these functions, and we chart a path to a meaningful long-term structuring of policies and financing instruments. CDR characteristics point to the need for up-front capital, continuous funding for scaling, and long-term operating funding streams, as well as differentiation based on permanence of storage and should influence the design of policy instruments. Transparency and early public deliberation are essential for charting a politically stable course of action on CDR, while specific policy designs are being developed in a way that ensures effectiveness, prevents rent-seeking at public expense, and allows for iterative course corrections. We propose a stepwise approach whereby various CDR approaches initially need differentiated treatment based on their differing maturity and cost through R&D pilot activity subsidies. In the longer term, CDR increasingly ought to be funded through mitigation results-oriented financing and included in broader policy instruments. We conclude that CDR needs to become a regularly-provided public service like public waste management has become over the last century.