[ls612]

$600 per ton is how much they are paying to remove it, not how much the externality is. Economists like Nordhaus (who won a Nobel for his work) who have done empirical work to quantify the level of externality have estimated $50-70 a ton as more reasonable numbers.

[adrianN]

The German government (the Umweltbundesamt) recommends between 195€/ton and 680€/ton in 2020, depending on the discounting function, with costs increasing to 250-765€/ton in 2050 [1]. The error bars on these estimates are terribly large because we don't know the CO2 sensitivity very precisely and we also disagree on which discounting function we should use to value damage in the future. Imo, tying the price of carbon to the price of atmospheric carbon removal is the most reasonable thing to do.

[1] https://www.umweltbundesamt.de/sites/default/files/medien/14...

[sbierwagen]

$50 a ton? Did that analysis not include sealevel rise? Or, more likely, did it put an arbitrary cutoff at the year 2100?

[chris_va]

(I work on this for a living...)

Yes, it includes things like sea level rise. Having said that, the giant knob hiding in the math is the discount rate. If you have $1 of damage in 2121, how much are you willing to pay today to avoid it? $1? $0.01?

Discount rates are usually in the 4.5-6% range. On the lower end, that means damage 100 years out is discounted 80x+. Most of the hefty damage from climate change happens from 2060 onward in most models, so the NPV to society not actually that high (yet). You also have to decide if society will allow geoengineering (e.g. stratospheric calcite, or something that fairly harmless by contrast but politically charged today) when things get really bad.

(Realistically, that will likely happen because the alternative is much worse, so do you price that in? Something like stratospheric aerosols can turn back the clock for a significant fraction of damage (minus OA and some other nastiness))

Anyway, the $50/ton number is intentionally framed as a purely economic one, and it's acknowledged that not all externalities are captured, so you may want to pick a different number.

Also, as an aside, $600/ton isn't where the market is going, and not something to anchor on. I hope pyrolysis+sequestration, which has a lot of benefits, will get to a low cost point. They'll be competing with things in the $50-150/ton range, with various levels of scalability.

[ls612]

It did include sea levels and it doesn’t use any arbitrary cutoff, it uses discounting. Incidentally, standard macro discounting rates mean that things a century from now are worth very little compared to the same things today, so if you were to cut off at 2100 it wouldn’t change too much.

[freddie_mercury]

Nordhaus is probably wrong on this, though. Most economists now believe he used the wrong discount rate.

https://grist.org/article/discount-rates-a-boring-thing-you-...

[Mathnerd314]

So that means that if the technology gets 10x cheaper then it'll be economically viable for the affected parties to pay for carbon sequestration. Charm says they think $45/ton is achievable. I guess the conclusion is that climate change will be solved in a few years?

[jnsaff2]

Nordhaus is a borderline climate criminal by some accounts: https://profstevekeen.medium.com/economic-failures-of-the-ip...

[ErikVandeWater]

Pricing an externality based on an economic forecast is farcical.

[ls612]

Lol the whole concept of externalities is an economic one. It is the idea that a transaction you engage in has effects on people outside the transaction. And when this will occur in the future by definition forecasts (not of economics, of the effects) must be used to estimate it