NEW MARKET HYPOTHESISRISK COST OF CARBONCENTRAL BANK DIGITAL CURRENCY

NEW MARKET HYPOTHESIS

How to manage climate systemic risk

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RISK COST OF CARBON

Pricing climate risk into the global financial system

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CENTRAL BANK DIGITAL CURRENCY

The case for a positive carbon price

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Social Cost of Carbon

The Social Cost of Carbon (SCC) is the negative externality created by anthropogenic greenhouse gases (GHG), and the SCC is essential to our understanding of climate change economics. The SCC is more precisely defined as the time-discounted marginal loss in economic welfare that results from an amount of GHGs emitted in a given year. The SCC is usually assigned units of USD per metric tonne of carbon dioxide equivalent CO2-e emissions. The following video introduces the SCC.

 

 

The conventional market- based policies that are used to internalize the SCC into the economy are Pigovian taxes (i.e. carbon taxes) or cap-and-trade schemes, and the ideal tax rate is chosen by cost-benefit analysis. In the following video, it is noted that cost-benefit analysis is not the only approach that can be used to manage the economy, and that cost-effectiveness analysis is another approach.

A key finding and proposition of the Global 4C project, is that there exists a second (overlooked) externalised cost, called the Risk Cost of Carbon (RCC), which should be managed with cost-effectiveness analysis.

 

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