Separating CO2 emission from removal targets comes with limited cost impacts

Abstract

Net-zero commitments have become the focal point for countries to communicate long-term climate targets. However, to this point it is not clear to what extent conventional emissions reductions and carbon dioxide removal (CDR) will contribute to net-zero. An integrated market for emissions and removals with a uniform carbon price delivers the economically efficient contribution of CDR to net-zero. Yet it might not fully internalise sustainability risks of CDR and hence could lead to its overuse. In this study, we explore the implications of separating targets for emissions and for removals delivered by novel CDR in global net-zero emissions pathways with the Integrated Assessment Model REMIND. We find that overall efficiency losses induced by such separation are moderate. Furthermore, limiting the CDR target comes with increasing emission prices but also significant benefits: lower cumulative emissions, a lower financial burden for public finance of CDR and limited reliance on geologic CO2 storage but fails to lower the biomass demand. Proposed targets should also ensure sufficient CDR deployment to achieve net-negative emissions in the second half of the 21st century.