This report, commissioned by Friends of the Earth and conducted by the Stockholm Environmental Institute, argues against Defra's existing approaches to carbon valuation based on the social cost of carbon at an assumed stablisation trajectory.
It also highlights why Defra's carbon price is lower than the widely advertised results of the PAGE model used by Stern, explores the reasoning behind Defra's methodology and reaches four key conclusions.
First, the UK need not build its climate policy around the fear that other countries will fail to abate. Secondly, the UK need not build its climate policy around the fear of investing too much in abatement. Thirdly, the pace of abatement matters, and finally, an accurate, realistic and compassionate estimation of the social cost and marginal abatement cost functions is essential if the carbon price is to be set at the intersection of these curves.
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