A new term for Carbon Price

[0UmfHxcvx5J7JoaOhFSs5mncnisTJJ6q]

Description of the issue

This originates from OEO Dev Meeting 24.
We do have monetary price and carbon dioxide equivalent quantity but no comound concept of the "price of carbon".

Ideas of solution

The "price of carbon" can mean a lot of things (in IAMs):

• the price of carbon certificates
• the level of a carbon tax
• either for CO₂ emissions only
• or for other GHGs as well
• for the entire economy
• or just select sectors
• or the "social cost of carbon"

Do @OpenEnergyPlatform/oeo-domain-expert-energy-modelling have additional concepts that need to be reflected?

I would suggest tackling the certificate price and the carbon tax for CO₂ emissions first and look into the rest later.

Workflow checklist

• I discussed the issue with someone else than me before working on a solution
• I already read the latest version of the workflow for this repository
• The goal of this ontology is clear to me

I am aware that

• every entry in the ontology should have a definition
• classes should arise from concepts rather than from words

[l-emele]

Reads that we need not only one price concept but a couple of concepts here. Prices are different from costs or taxes. Some first ideas:

• A CO2 price is a monetary price of an emission quantity. We already have the parent class monetary price (A monetary price is an economic value that describes the amount of money requested, expected, required or given in exchange for something else.)
• Social cost of carbon is the cost for the society of an emission quantity. We already have the parent class cost (Cost is an economic value that describes the amount of money needed to buy, make, or do a thing.)

We don't have yet a parent class tax but we can define it and derive a CO2 tax from that.

I am a bit reluctant on using the word carbon in the labels for two reasons:

1. When using the word carbon, it is often not clear whether the bases is 1 t of CO2 or 1 t C.
2. Some greenhouse gases like N2O or some of the F-gases not even contain carbon.

But I know that the word carbon is often used in the domain I am open to use that word in alternative terms.

[KaiSchnepf]

• A CO2 price is a monetary price of an emission quantity. We already have the parent class monetary price (A monetary price is an economic value that describes the amount of money requested, expected, required or given in exchange for something else.)

We did not define emission quantity yet, only emission quantity value.

• Social cost of carbon is the cost for the society of an emission quantity. We already have the parent class cost (Cost is an economic value that describes the amount of money needed to buy, make, or do a thing.)

We did not define society yet. Maybe we could use agent in general or market participant if we specify.

We don't have yet a parent class tax but we can define it and derive a CO2 tax from that.

A definition of tax would also be generally useful.
First proposal based on OECD: Tax is an economic value that is a compulsory unrequited payment to the government.
Do we need a wider definition for our domains? We do not have a definition for government but could use organisation instead.

[l-emele]

• A CO2 price is a monetary price of an emission quantity. We already have the parent class monetary price (A monetary price is an economic value that describes the amount of money requested, expected, required or given in exchange for something else.)

We did not define emission quantity yet, only emission quantity value.

Sorry, I meant emission value (An emission value is a process attribute that quantifies the output of an emission process. It can be calculated using the emission factor of that emission process.).

[stap-m]

FYI: in PR #909 we included tax: A tax is a levy whose returns are used by the government to finance expenditures for the common welfare.

[stap-m]

I made some slight changes to the proposals above.

• carbon tax is a tax for emitting CO2 or other greenhouse gases (measured in CO2 equivalent values).
  • alternative term CO2 tax
• emission certificate price is a monetary price of an emission certificate that allows the emission of a certain emission value.
  • alternative term CO2 price ?
• social cost of carbon is the cost the society bears for an emission value.
  • alternative term social cost of CO2 ?

[l-emele]

I am fine with this.

[stap-m]

Ok, I'll imlepment.

[stap-m]

I'm adding some is about relations.
has quantity value-relations won't fit here. Maybe we need a reverse relation like "has economic value"?!

[l-emele]

I think we should add both economic value of as sub property of quantity value of and has economic value as sub property of has quantity value with economic value of being the inverse of has economic value.

Then we can e.g. add to social cost of carbon the axiom 'economic value' of some 'emission value'.

[stap-m]

I'm skipping the is about relation for carbon tax because it get's complicated with moving all the classes to oeo-shared. We can still add axioms here when #958 and #870 are done.

[l-emele]

Good idea.

[l-emele]

We also wanted to have a general CO2 price, if I understand the discussion correctly. That is also what is needed in OpenEnergyPlatform/oeo-extended#4.

[0UmfHxcvx5J7JoaOhFSs5mncnisTJJ6q]

In reference to OpenEnergyPlatform/oeo-extended#4, IAMs will (usually) implement a carbon price either through a carbon tax or through some emission trading scheme, depending on the scenario setup. Both have different implications (either price or emission quantity are determined by policy, banking and borrowing is impossible for a tax, but can be permissible in a trading scheme).
For high-level/meta studies (like the assessment reports) it is expedient to treat them collectively to capture modelling uncertainty.

So there is carbon tax and emission certificate price, with alternative terms CO2 tax and CO2 price, respectively.
Both are a bit unspecific, but I would opt to table that for later.

The "last common superclass" of both is continuant:

• continuant → generically dependent continuant → information content entity → quantity value → economic value → monetary price → emission certificate price
• continuant → specifically dependent continuant → policy instrument → levy → tax → carbon tax

So can we put carbon price anywhere and they it's either one of emission certificate price or carbon tax, or does it need to be some place both classes are derived from? @OpenEnergyPlatform/oeo-general-expert-formal-ontology

[l-emele]

I think, we have to distinguish between the carbon tax as political instrument and the tax value that tax sets. The class tax is defined as: A tax is a levy whose returns are used by the government to finance expenditures for the common welfare.
Similarly, we distinguish between an emission certificate and an emission certificate price.

So what about this structure?

• An emission price is a monetary price of emitting a certain emission value.
• A CO2 price is an emission price of emitting a certain CO2 emission value.
• A carbon tax value is a CO2 price that is set by a carbon tax.
• An emission certificate price is a monetary price an emission price of an emission certificate that allows the emission of a certain emission value.

(Definitions might some further refinement.)

[stap-m]

And carbon price would be the alternative term to CO2 price?!
@0UmfHxcvx5J7JoaOhFSs5mncnisTJJ6q does the proposal by @l-emele meet your requirements?

[0UmfHxcvx5J7JoaOhFSs5mncnisTJJ6q]

Yes, I guess so. Probably would need
A CO2 emission certificate price is an emission price of an CO2 emission certificate that allows the emission of certain CO2 emission value
or something to be specific to CO2 emissions.

[l-emele]

I am fine with adding CO2 emission certificate and CO2 emission certificate price. So I think this is ready for implementation.

[stage1407]

I could implement that if no one else wants to.

[l-emele]

Go for it! 🚀

[stage1407]

@l-emele

• With the implementation I've rather decided for EquivalentClasses, because the definitions can be modeled very well with OWL. If there a SubClass-Property is desired, please let me know
• to model 'is emission value of' i decided to use economic value of,
  i think it should be ok, but if don't we should introduce a property like emission value of as subproperty

[l-emele]

Which class do you mean? To solve this issue, more than one class have to be added.
And I cannot find in the discussion something about using the (non-existing) relation is emission value of.

Anyway, as CO2 emission certificate is a subclass of emission certificate and CO2 emission certificate price is a subclass of emission certificate price, the structure of the axioms should be the same. No need for reinventing the wheel.

[l-emele]

@stage1407 : What's the state of implementing this issue? You volunteered seven weeks ago to do so.

[stage1407]

@l-emele
Yeah, sorry for putting this off.
I had been working the last weeks on Issue 870.
But I have planned for the next days to work on this Issue until it can be closed.

[l-emele]

As this is still not implemented, I'll implement it now.

[l-emele]

I've now partly implemented what we've discussed so far in #1253. However, while implementing, I discovered some things:

• We talked about CO2 emission certificate and use it in the definition of CO2 emission certificate price, but no definition was provided. Here is a proposal, derived from the definitions of EU allowance and Annual Emission Allowance: A CO2 emission certificate is an emission certificate that permits the emission of a CO2 emission quantity of 1 tonne.
• To fully axiomatise the relations, we should also add the following two classes:
  • CO2 emission: A CO2 emission is an emission that releases carbon dioxide.
    Alternative label: carbon dioxide emission
    Axiom: 'CO2 emission' 'Equivalent To' emission and ('has participant' some 'carbon dioxide')
  • CO2 emission value: A CO2 emission value is greenhouse gas emission value that quantifies the output of a CO2 emission process.

[stage1407]

Ok, for some reason the commit wasn't referenced on the issue so I'm posting it here again.
I have implemented "CO2 emission" and "CO2 emission value".