What’s next after carbon accounting? Emissions liability management

Abstract

Abstract We propose a method to internalize the externality of greenhouse gas emissions built on the foundation of greenhouse gas emissions accounting, whereby firms match long-duration emissions liabilities with duration-matched removal assets. This method drives a simple decision rule: only emit greenhouse gases if the value created exceeds the cost of reversing the emissions. This approach will drive capital allocation to enhance at-risk natural capital, expand investment in technology-based carbon dioxide removals and reductions, rationalize fraught carbon markets and provide auditable and transparent net zero claims and guidance for transition pathways.