The Social Cost of Carbon
One carbon credit corresponds to one tonne of carbon, but not all credits are priced the same. Carbon removal credits can be priced anywhere in the range of $25-$1500, while some avoidance credits on the market cost as little as $2-3.
Choosing the cheapest option may seem like a good business move. After all, it has the same impact on the climate, right? The answer is, as usual, not that simple. To make climate policy and investment effective, carbon pricing needs to account for how emissions affect society.
What is the social cost of carbon?
- Impacts on human health (e.g. increased mortality due to air pollution)
- Damage to infrastructure from extreme weather events
- Loss of biodiversity and ecosystem services
- Impacts on food and energy systems
Expressing the effects of global warming in economic terms helps policymakers and industry understand the impact of their decisions, and can make emission reductions more economically viable.
— Simon Bager, Co-Founder and Chief Impact Officer
Valuing the Social Cost of Carbon Credits
Official recommendations range from $100/tCO2 (UN IPCC) to well into the thousands of dollars. These estimations are reached by modelling climatic responses (such as temperature and sea level rise) to expected future emissions. The projected cost of damages is then converted into present-day economic value.
How much should a credit cost?
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Klimate's approach to carbon pricing
Accurate SCC estimates are crucial to ensure that outcomes actually contribute to the climate goals set by governments and businesses, and larger targets like limiting global warming to 1.5ºc by 2100. By pricing our carbon removal portfolios in line with the latest science, Klimate seeks to make sure its clients stay ahead of the curve and create real climate impact.
Talk to a carbon removal strategist
Finding the right way to remove your CO₂ emissions can seem overwhelming. Luckily, we are always here to help. You can book a meeting to walk through how our solution might fit your needs, or simply send us a message.
Talk to a carbon removal strategist
Finding the right way to remove your CO2 emissions can seem overwhelming. Luckily, we are always here to help. You can book a meeting to walk through how our solution might fit your needs, or simply send us a message.