Operationalizing the net-negative carbon economy.

The remaining carbon budget for limiting global warming to 1.5 degrees Celsius will probably 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 the repayment of previously accrued carbon debt by establishing the responsibility of emitters for the net removal of carbon dioxide through 'carbon removal obligations' (CROs). Inherent risks, such as the risk of default by 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 that is 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.

Global economic impacts of COVID-19 lockdown measures stand out in high-frequency shipping data.

The implementation of large-scale containment measures by governments to contain the spread of the COVID-19 virus has resulted in large impacts to the global economy. Here, we derive a new high-frequency indicator of economic activity using empirical vessel tracking data, and use it to estimate the global maritime trade losses during the first eight months of the pandemic. We go on to use this high-frequency dataset to infer the effect of individual non-pharmaceutical interventions on maritime exports, which we use as a proxy of economic activity. Our results show widespread port-level trade losses, with the largest absolute losses found for ports in China, the Middle-East and Western Europe, associated with the collapse of specific supply-chains (e.g. oil, vehicle manufacturing). In total, we estimate that global maritime trade reduced by -7.0% to -9.6% during the first eight months of 2020, which is equal to around 206-286 million tonnes in volume losses and up to 225-412 billion USD in value losses. We find large sectoral and geographical disparities in impacts. Manufacturing sectors are hit hardest, with losses up to 11.8%, whilst some small islands developing states and low-income economies suffered the largest relative trade losses. Moreover, we find a clear negative impact of COVID-19 related school and public transport closures on country-wide exports. Overall, we show how real-time indicators of economic activity can inform policy-makers about the impacts of individual policies on the economy, and can support economic recovery efforts by allocating funds to the hardest hit economies and sectors.