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Climate Economics Seminar: The Time Value of Carbon and Carbon Storage: Clarifying the Terms and the Policy Implications of the Debate

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Date(s): September 8th, 10:30 am - noon

Location: Room 4128, EPA West Building, 1301 Constitution Ave., NW, Washington, DC

Contact: Carl Pasurka, 202-566-2275

Presenter: Liz Marshall, US Department of Agriculture, Economic Research Service

Description: Consider the question: "Is there any reason to invest in mitigation projects that will capture carbon today and then release an equivalent amount of carbon in 50 years?"

This question asks whether there is any value to the temporary storage of carbon. Note that the question excludes many of the common contexts in which concepts of "temporary storage" or "impermanence" are debated; the question does not address the uncertainty associated with the "risk of reversal" discussion, for instance, because we assume that storage reversal will occur with 100% certainty and correspondingly, that the carbon remains stored for the project duration of 50 years. The question asks whether there is value to storage that is known to be temporary; put another way-- does temporary storage of carbon have value in and of itself?

In this discussion paper we will explore the issues and implications associated with temporary carbon storage in an attempt to articulate whether or not temporary carbon storage has a value, what the nature of that value is, and how it can be used to inform policy design in a variety of relevant arenas for greenhouse gas (GHG) accounting and climate policy. Specifically, this paper explores the implications of a positive valuation of temporary storage in three contexts: lifecycle GHG accounting for biofuels, agricultural offsets accounting, and deferred emissions from reduced deforestation and degradation (REDD) mechanisms.

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