Biofuels and the Time Value of Carbon

The briefing argues against the simple extrapolation of financial discount rates to physical carbon flows when assessing the emissions impact of land-use change for biofuels. It proposes distinguishing between the 'project horizon' (cultivation period) and the 'impact horizon' (atmospheric effect period), suggesting the latter be treated as a rolling target. The document further recommends that salvaged carbon from future revegetation be excluded from initial conversion accounting and suggests that if discounting is necessary, a range of values—including zero or negative rates—should be considered.

• The document argues that there is no strong theoretical basis for applying financial discount rates, such as interest rates or the social rate of time preference, to physical carbon units.
• Accounting for biofuels should distinguish between the 'project horizon', which is the duration of feedstock cultivation and fossil fuel displacement, and the 'impact horizon', which is the duration over which atmospheric impacts are felt.
• To ensure atmospheric impacts are fully accounted for regardless of when they occur during a project, the impact horizon should be measured as a rolling target relative to the year of emissions rather than a fixed target from the project's start date.
• If full-cost accounting is bypassed, the selection of a discount procedure for carbon units should consider non-traditional options, including negative or zero discount rates and declining rates for the longer impact horizon.
• Carbon benefits from future revegetation or acreage reversion should be excluded from the initial GHG accounting protocol for land-use conversion because these benefits are not guaranteed at the time of conversion.

APA

World Resources Institute (n.d.). Biofuels and the Time Value of Carbon. https://www.wri.org/research/biofuels-and-time-value-carbon

Chicago

World Resources Institute. Biofuels and the Time Value of Carbon. n.d. https://www.wri.org/research/biofuels-and-time-value-carbon.

Wikipedia

{{cite report |author=World Resources Institute |title=Biofuels and the Time Value of Carbon |url=https://www.wri.org/research/biofuels-and-time-value-carbon |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitutendbiofuels, author = {{World Resources Institute}}, title = {{Biofuels and the Time Value of Carbon}}, institution = {World Resources Institute}, url = {https://www.wri.org/research/biofuels-and-time-value-carbon}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }