New Risk Metric 'Carbon at Risk' Developed to Enhance Carbon Market Investment and Climate Goals
Researchers have introduced a new standardized metric called 'Carbon at Risk' (CaR) to quantify the risks associated with carbon removal projects. This metric aims to provide a consistent way to assess the likelihood that contracted carbon removal efforts, whether nature-based or engineered, might fall short due to environmental, technological, or political factors. Previously, these risks were described qualitatively, leading to an uncertain investment environment for buyers and insurers. CaR allows for a quantitative comparison of different carbon removal technologies on a risk-adjusted basis, enabling the construction of diversified portfolios. This development is expected to help regulators, buyers, insurers, and investors make more informed decisions, potentially unlocking significant investment needed to limit global warming to 1.5°C. The metric was developed through collaborations between academics and industry stakeholders and has been tested in forest carbon and geological storage scenarios.