Abstract

Abstract

Meeting net-zero targets requires a rapid and large-scale increase in investment in carbon dioxide removal, and ensuring that investment is allocated efficiently across technologies with fundamentally different risk profiles. Carbon removal markets currently lack a standardised, quantitative measure of permanence risk, leaving buyers and policymakers reliant on coarse qualitative classifications that inhibit informed comparison and portfolio construction. Inspired by Value at Risk in financial markets, we propose Carbon at Risk (CaR): the additional removal that must be purchased to guarantee, at a given confidence level and time horizon, that a target quantity of carbon remains durably stored. We estimate CaR in two empirical applications with very different risk profiles: forest carbon, where Monte Carlo simulations calibrated to satellite-derived fire data yield a 95% CaR at 200 years of up to 80%, and geological storage (DACCS), where the 95% CaR ranges from 0.15% to 17% depending on regulatory regime. We then show how combining technologies in a portfolio creates a trade-off between cost and risk: the minimum cost of meeting a durability target depends on within-technology correlation and the relative price of safer alternatives. CaR provides a practical basis for calibrating buffer pools, comparing projects on a common scale, and designing cost-effective removal portfolios.

Bio

Tom Bearpark is an environmental economist, whose research focuses on the impacts of climate change. He completed his PhD at Princeton University in December 2025. He is now a Post-Doctoral Research Fellow at the University of Exeter, and a Visiting Fellow at the LSE Grantham Institute.