Abstract
Negative emissions technologies are attracting the interest of investors in the race to make them effective and profitable. When deployed at scale, they will be financed through public funds, reducing the fiscal space for a socially inclusive climate transition. Moreover, if the private sector owns negative emissions technologies, potentially large profits would disproportionally benefit investors and equity holders. Here we quantify the inequality repercussions of direct air capture of CO2 in a 1.5 °C scenario, using a regional integrated assessment model that features within-country income heterogeneity. We find that, under a single carbon market, financing negative emissions technologies could double the increase in income inequality of climate policy. The effects are highest around the time of net zero and in scenarios with carbon budget overshoot. We identify the drivers of the inequality increase and discuss policy provisions to mitigate the equity concerns of CO2 removal strategies.
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Data availability
All scenario runs and code used to produce the figures and data analysis are available in open source at https://doi.org/10.5281/zenodo.8397488.
Code availability
The model used to produce the scenarios is available in open source at https://github.com/witch-team/RICE50xmodel. To run the model, an active GAMS licence with CONOPT3 is required.
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All the authors designed and conceptualized the research questions and scenarios. P.A. and J.E. performed the model advancements. P.A. ran the scenarios, analysed the data and produced the figures. P.A. and M.T. wrote the first draft. All the authors extensively contributed to the final version of the paper.
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Extended data
Extended Data Fig. 1 Calibration of income taxes and wealth elasticities.
Income taxes elasticities (red) and wealth-to-income elasticity (blue) for each year between 2000 and 2020. Boxplots highlight median, 25th and 75th percentiles, points represent outliers. The number of observations and the median of the values is highlighted in text for each year.
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Supplementary Annexes A–L.
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Andreoni, P., Emmerling, J. & Tavoni, M. Inequality repercussions of financing negative emissions. Nat. Clim. Chang. 14, 48–54 (2024). https://doi.org/10.1038/s41558-023-01870-7
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DOI: https://doi.org/10.1038/s41558-023-01870-7
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