Carbon sequestration and storage in mangroves, salt marshes and seagrass meadows is an essential coastal ‘blue carbon’ ecosystem service for climate change mitigation. Here we offer a comprehensive, global and spatially explicit economic assessment of carbon sequestration and storage in three coastal ecosystem types at the global and national levels. We propose a new approach based on the country-specific social cost of carbon that allows us to calculate each country’s contribution to, and redistribution of, global blue carbon wealth. Globally, coastal ecosystems contribute a mean ± s.e.m. of US$190.67 ± 30 bn yr⁻¹ to blue carbon wealth. The three countries generating the largest positive net blue wealth contribution for other countries are Australia, Indonesia and Cuba, with Australia alone generating a positive net benefit of US$22.8 ± 3.8 bn yr⁻¹ for the rest of the world through coastal ecosystem carbon sequestration and storage in its territory.

Since 2005, the EU ETS has provided a market-based price signal for European carbon emissions. This article reviews the literature on the formation of carbon allowance prices during phase II of the EU ETS. A consensus has emerged in the literature that allowance prices are driven by fuel prices and other variables that affect the expected amount of abatement required to meet the EU ETS emissions cap. However, this relationship is not robust, most likely because the relevant abatement technologies change with the economic conditions in which they operate. There is evidence that models that explicitly account for uncertainty about the future demand and supply of allowances are better at explaining allowance price variation during certain periods. However, our understanding of the level of the allowance price remains poor. We cannot say with any degree of confidence whether the allowance price is “right,” in the sense that it reflects marginal abatement costs, or whether there is a price wedge caused by uncertainty, transaction costs, or price manipulation. Nevertheless, we find that the EU ETS market has matured in phase II compared with phase I and that banking of allowances has induced the market to incorporate the future scarcity of allowances and, as intended, to smooth the effect of temporary shocks. We argue that further research is needed in several key areas to increase our understanding of the emissions allowance market provided by the EU ETS. (JEL: Q56, Q58)

In one of the central scenarios for meeting an European Union-wide net zero greenhouse gas (GHG) emissions target by 2050, the emissions cap in the European Union Emissions Trading System (EU ETS) becomes net negative. Despite this ambition, no mechanism allows for the inclusion of CO₂ removal credits (CRCs) in the EU ETS to date. Amending the EU ETS legislation is required to create enabling conditions for a net negative cap. Here, we conceptually discuss various economic, legal, and political challenges surrounding the integration of CRCs into the EU ETS. To analyze cap-and-trade systems encompassing negative emissions, we introduce the effective (elastic) cap resulting from the integration of CRCs in addition to the regulatory (inelastic) cap, the latter now being binding for the net emissions only. Given current cost estimates for BECCS and DACCS, minimum quantities for the use of removals, as opposed to ceilings as currently discussed, would be required to promote the near-term integration of such technologies. Instead of direct interaction between the companies involved in emissions trading and the providers of CRCs, the regulatory authority could also transitionally act as an intermediary by buying CRCs and supplying them in turn conditional upon observed allowances prices, for example, by supporting a (soft) price collar. Contrary to a price collar without dedicated support from CRCs, in this case (net) compliance with the overall cap is maintained. EU legislation already provides safeguards for physical carbon leakage concerning CCS, making Bioenergy with Carbon Capture and Storage (BECCS) and Direct Air Capture and Storage prioritized for inclusion in the EU ETS. Furthermore, a special opportunity might apply for the inclusion of BECCS installations. Repealing the provision that installations exclusively using biomass are not covered by the ETS Directive, combined with freely allocated allowances to these installations, would allow operators of biomass installations to sell allowances made available through the use of BECCS. Achieving GHG neutrality in the EU by 2050 requires designing suitable incentive systems for CO₂ removal, which includes the option to open up EU emissions trading to CRCs.

Recent suggestions to slow down the increase in atmospheric carbon dioxide have included ocean fertilization by addition of the micronutrient iron to Southern Ocean surface waters, where a number of natural and artificial iron fertilization experiments have shown that low ambient iron concentrations limit phytoplankton growth. Using a coupled carbon-climate model with the marine biology's response to iron addition calibrated against data from natural iron fertilization experiments, we examine biogeochemical side effects of a hypothetical large-scale Southern Ocean Iron Fertilization (OIF) that need to be considered when attempting to account for possible OIF-induced carbon offsets. In agreement with earlier studies our model simulates an OIF-induced increase in local air-sea CO₂ fluxes by about 73 GtC over a 100-year period, which amounts to about 48% of the OIF-induced increase in organic carbon export out of the fertilized area. Offsetting CO₂ return fluxes outside the region and after stopping the fertilization at 1, 7, 10, 50, and 100 years are quantified for a typical accounting period of 100 years. For continuous Southern Ocean iron fertilization, the CO₂ return flux outside the fertilized area cancels about 20% of the fertilization-induced CO₂ air-sea flux within the fertilized area on a 100-yr timescale. This "leakage" effect has a radiative impact more than twice as large as the simulated enhancement of marine N₂O emissions. Other side effects not yet discussed in terms of accounting schemes include a decrease in Southern Ocean oxygen levels and a simultaneous shrinking of tropical suboxic areas, and accelerated ocean acidification in the entire water column in the Southern Ocean at the expense of reduced globally-averaged surface-water acidification. A prudent approach to account for the OIF-induced carbon sequestration would account for global air-sea CO₂ fluxes rather than for local fluxes into the fertilized area only. However, according to our model, this would underestimate the potential for offsetting CO₂ emissions by about 20% on a 100 year accounting timescale. We suggest that a fair accounting scheme applicable to both terrestrial and marine carbon sequestration has to be based on emission offsets rather than on changes in individual carbon pools.

The 2030 Agenda for Sustainable Development includes a set of 17 sustainable development goals (SDG) with 169 specific targets. As such, it could be a step forward in achieving efficient governance and policies for global sustainable development. However, the current indicator framework with its broad set of individual indicators prevents straightforward assessment of synergies and trade‐offs between the various indicators, targets, and goals, thus, heightening the significance of policy guidance in achieving sustainable development. With our detailed analysis ofSDG14 (Ocean) for European Union (EU) coastal states, we demonstrate how the (complementary) inclusion of composite indicators that aggregate the individual indicators by applying a generalized mean can provide important additional information and facilitate the assessment of sustainable development in general and in theSDGcontext in particular. Embedded in the context of social choice theory, the generalized mean varies the specification of substitution elasticity and thus allows: (a) for a straightforward distinction between a concept of weak and strong sustainability and (b) for straightforward sensitivity analysis. We show that while in general theEUcoastal states have a fairly balanced record at theSDG14 level, certain countries like Slovenia and Portugal with a fairly balanced and a fairly unbalanced showing, respectively, rank very differently in terms of the two concepts of strong sustainability.