Global carbon reward
The global carbon reward is a proposed international policy for financing the rapid decarbonisation of the world economy and scaling-up carbon dioxide removal to avoid dangerous climate change. The policy is market-based and designed to offer proportional financial rewards for carbon dioxide removal and adaptive financial rewards for conventional greenhouse gas mitigation. The policy is unconventional because it would offer positive financial incentives, called carbon rewards, that are valorised with a financial mechanism that does not impose direct costs on governments, firms, or citizens.
Background
Market failure in carbon emissions
Since the start of the United Nations Framework Convention on Climate Change in 1992, the atmospheric concentration of carbon dioxide —a dominant anthropogenic GHG—has risen steadily, as shown by the Keeling Curve. Despite numerous Conference of the Parties meetings and several treaties, CO2 and other GHG emissions have continued at dangerously high levels.A major hurdle to a rapid clean energy transition and global economic decarbonisation, is a significant gap in available climate finance. According to a study of renewable energy systems by ARENA, the financial shortfall for achieving the goals of the Paris Agreement is about US $27 trillion for the 2016-2050 period. The International Energy Agency estimate that investments in clean energy will need to increase to about US $5 trillion per year by 2030 in order to achieve net-zero carbon emissions by 2050.
Further complicating the economics of climate change is the possibility that cumulative residual CO2 emissions from fossil fuels could reach 850–1,150 GtCO2 for the period 2016–2100 even if stringent policies and carbon taxes are implemented. For these and other reasons there is an apparent need for new policies that can accelerate the transition to low-carbon energy systems and finance large-scale CDR.
Policy initiative and history
The shortfall in climate finance inspired Delton Chen, a civil engineer, to found a climate policy initiative in 2014 with the goal of developing a new policy that combines market and monetary mechanisms. Seminal ideas for the policy first appeared at the 2015 Earth System Governance conference, Canberra, and in MIT's Climate Co-Lab competitions where the seminal policy was awarded two prizes. The seminal policy was first published in 2017 by Delton Chen, Joël van der Beek, and Jonathan Cloud to address the 2015 Paris Agreement. The policy, in its formative years, was called the Global 4C Risk Mitigation Policy, where 4C is an acronym that stands for complementary currencies for climate change.Between 2017–2019, the policy and related terminology were modified and refined. Chen and his colleagues published two policy papers and in 2018 Guglielmo Zappalà wrote an undergraduate thesis that examined the role of central banks in responding to climate change with monetary policy and macro-prudential regulation. In 2019, Chen described the carbon reward policy in terms of a central bank remit and open-market operations, and the possible application of blockchain technologies.
In 2021 the policy initiative was renamed the Global Carbon Reward and the GCR website was launched on World Environment Day 2021. From 2021 onwards, the GCR initiative has been fiscally managed by Inquiring Systems, Inc., a 501 organisation. The policy initiative has capitalised letters, while the policy's generic name is written in lower-case.
Between 2020-2025, the carbon reward policy was imprecisely defined because it was only presented in the grey literature and the policy details were evolving. During these years, the market instrument of the policy was called a carbon currency.
In 2022, Sylvan Lutz wrote a masters thesis, comparing the relative benefits of carbon taxes and carbon rewards in fossil fuel exporting regions. In October 2025, Delton Chen elucidated the carbon reward policy in a working paper. Chen's 2025 working paper is a milestone in the policy's development by providing technical definitions, clear terminology, and economic justifications based on an expanded economic framework. The market instrument for the policy was also renamed carbon reward to avoid confusion with currencies. Chen's expanded economic framework contextualised the market failure in GHGs in terms of climate damages, systemic risks, and market policies. This expanded framework combines the economic concepts of Arthur Cecil Pigou and Ronald Coase with new economic concepts introduced by Chen for responding to the systemic risks to the carbon cycle.
Popular culture
The American science fiction writer, Kim Stanley Robinson, embraced the idea of a carbon coin in his climate change novel The Ministry for the Future. The novel portrays a series of events that lead to the establishment of a transnational organisation that is mandated to deploy carbon coins to address the Paris Agreement. The author's inspiration for the carbon coin concept derives from the carbon reward policy and is attributed to Delton Chen via the phrase "Chen's papers".Policy Overview
Policy type
The carbon reward is a market-based climate policy for establishing an international mitigation market with a price floor that is guaranteed by central banks. An alternative name for this policy is mitigate and trade. This alternative name derives from the fact that the policy rewards GHG mitigation with XCR, and invites voluntary XCR trading and investing as a means of distributing the mitigation cost. Investors would be attracted to the XCR because of its guaranteed price floor. Central banks would be the 'buyers of last resort' to ensure that the value of the XCR remains above the price floor. A potential benefit of the approach is that it could span the multi-trillion-dollar climate finance gap that is currently impeding the main goals of the 2015 Paris Agreement.The term carbon reward distinguishes the policy from other market policies, such as carbon taxes, cap and trade, and subsidies, and it also distinguishes the instrument from carbon credits and carbon offsets. The carbon reward is a performance-based grant and a type of results-based climate financing. According to the World Bank, RBCF is "...a well-established financing modality in the health and education sectors but it is still in an early stage of deployment in the area of climate change".
The carbon reward is considered by Delton Chen to be a necessary policy innovation for correcting a market-and-system failure in GHG emissions. Chen argues that the climate crisis is actually a market-and-system failure that is characterised by a new type of externality, called a systemic externality, which he claims is overlooked in standard economic scholarship and explains the political gridlock over the main goals of the Paris Agreement.
Policy objectives
The primary objective of the carbon reward is to declare a GHG mitigation roadmap that aligns with the main goals of the Paris Agreement and to adhere to this roadmap through voluntary collective action. Technically speaking, this objective is framed by the internalisation of the systemic externality that was introduced by Delton Chen. Chen views this internalisation process as complementary to the internalisation of the negative externality that is related to man-made GHG emissions. The systemic externality is attributed to the unfavourable dynamics of societal and earth systems that amplify the market failure and make it politically intractable when relying on standard policies. The negative externality, on the other hand, is driven by the self-interest of market actors who do not pay enough for their GHG emissions. The carbon reward should be combined with other policies to establish 'carrot and stick' carbon pricing so that the systemic externality and the negative externality are both internalised.A secondary objective of the carbon reward is to maximise co-benefits and minimise the harms that would be generated by mitigation actions in the carbon reward market. Co-benefits are considered to include community wellbeing, ecosystem health, and industrial reliability and may also be understood in terms of the UN's sustainable development goals.