首页|Temporary sequestration credits: an instrument for carbon bears
Temporary sequestration credits: an instrument for carbon bears
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Temporary crediting of carbon storage is an 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 to a permanent credit. We 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 SO_2, allowance prices.
carbon sequestrationcarbon markets
Kenneth M. Chomitz、Franck Lecocq
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Development Research Group, World Bank, 1818 H Street NW, Washington DC 20433, USA
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