On the Governance of Carbon Dioxide Removal – a Public Economics Perspective

Climate policy increasingly requires carbon dioxide removal (CDR). We describe its role, characterize optimal flows for non -permanent removals and describe optimal pricing regimes under different information and liability conditions. Non -permanent removal - though to a certain extent optimal - creates liabilities that warrant careful risk management. Thus, seemingly cheap land -based technologies can become expensive. We discuss possibilities for integrating CDR in the EU policy architecture and define four tasks: managing the emission cap; R&D support; quality certification of removals; management of liabilities from non -permanent CDR. We propose three institutions for these tasks: a European Carbon Central Bank, a Carbon Removal Certification Authority and a Green Leap Innovation Authority.