to Forestry Commission home page
to Forest Research home page
Forest Research home > Research > People, trees and woodlands > Forest economics > Carbon valuation, discounting and risk management

Current UK government guidance for social value of carbon

This current UK government guidance (Cover of UK Government Carbon Valuation in UK Policy AppraisalDECC, 2009a, DECC, 2010) includes central estimates for 2010 of:

  • £22/tCO2e (£79/tC) for sectors covered by the EU Emissions trading scheme (ETS) and
  • £52/tCO2e (£190/tC) for non-ETS sectors
  • Both rising over time to £308/tCO2e (£1129/tC) in 2077 at 2009 prices, thereafter declining.

Based upon target reductions of 34% compared to 1990 levels by 2020 and 80% by 2050, estimated values are considered consistent with the UK’s contribution to limiting global temperature increase to around 2°C, and atmospheric GHG concentrations to within the 460-480ppm CO2e range in 2200.

The effect of applying Treasury Green Book (declining) discount rates (Treasury, n.d.) is shown in the table below for selected years, illustrating how present values of future carbon benefits (i.e. what they are estimated to be worth currently) initially declines, before increasing again.

UK Social Values of Carbon (£/tCO2e at 2009 prices)
YearSectors covered by EU ETSSectors not covered by EU ETS
Central Price of CarbonDiscounted Price of CarbonIndex (2010 Discounted Price =100)Central Price of CarbonDiscounted Price of CarbonIndex (2010 Discounted Price =100)
2010 22 22 100 52 52 100
2020 25 18 82 60 43 82
2030 70 35 163 70 35 68
2040 135 48 222 135 48 93
2050 200 53 245 200 53 103
2060 266 52 243 266 52 102
2070 301 44 204 301 44 85
2080 306 33 154 306 33 65
2090 292 24 113 292 24 47
2100 268 17 81 268 17 34

The impact of tighter targets

Were accelerating global emissions, more severe than anticipated impacts, non-negligible probabilities of catastrophic impacts, or a desire for greater certainty that critical thresholds will not be exceeded, to lead to tighter targets being adopted, estimates of the social value of carbon would need to be revised upwards.

Research report

Forests and carbon: valuation, discounting and risk management (PDF-1168K)
Reviewing methods to value carbon over time, examining approaches for dealing with risk and considering approaches that could be used in extending standards to forestry more generally in voluntary carbon markets in the UK.

Research summary

The EU Emissions Trading System: Opportunities for Forests? (PDF-124K)
Brief research summary including background, objectives, methods, findings and recommendations.

Contact

For further information contact Gregory Valatin