Operationalizing the net-negative carbon economy.

The remaining carbon budget for limiting global warming to 1.5°C will likely be exhausted within this decade1,2. Carbon debt3 generated thereafter will need to be compensated by net negative emissions4. However, economic policy instruments to guarantee potentially very costly net carbon-dioxide removal (CDR) have not yet been devised. Here, we propose intertemporal instruments to provide the basis for widely applied carbon taxes and emission trading systems to finance a net negative carbon economy5. We investigate an idealized market approach to incentivize repayment of previously accrued carbon debt by establishing emitters' responsibility for net carbon removal through 'Carbon Removal Obligations' (CROs). Inherent risks, such as the default risk of carbon debtors, are addressed by pricing atmospheric CO2 storage through interest on carbon debt. In contrast to the prevailing literature on emission pathways, we find that interest payments for CROs induce substantially more ambitious near-term decarbonization complemented by earlier and less aggressive deployment of CDR. We conclude that CROs will need to become an integral part of the global climate policy mix if we are to ensure the viability of ambitious climate targets and an equitable distribution of mitigation efforts across generations.