REVERSE TAX CREDIT (OUTCOME-BASED, PER-TONNE PAYOUT)

A reverse tax credit pays any eligible supplier a fixed amount for each tonne of CO₂ it removes and stores, once the result has been independently verified. The name reflects the mirror image of a carbon tax, but payment can be made in cash and does not require the supplier to owe tax. Suppliers do not compete for a limited project award, although government may cap total spending. Unless the scheme buys the resulting removal, suppliers may also sell it privately.

The central choices are which methods qualify, whether they remove atmospheric or sustainable biogenic carbon, how project emissions are subtracted, and how long the carbon must remain stored. Payment should follow independent verification, with repayment if storage later fails. The rate, inflation adjustment, duration and overall spending limit determine whether the offer is credible and affordable. Ownership must be explicit because only one buyer can own and claim each removal. For foreign projects, linked registries should show which country counts the result toward its climate target. Combined public support should be disclosed and controlled.

A guaranteed payment for every verified tonne can close part of the gap between removal costs and what private buyers will pay. Because access does not depend on winning an auction or having a tax bill, the same offer can reach suppliers of different sizes and methods. A multi-year commitment can make future revenue easier for lenders and investors to assess. Paying only after delivery limits public exposure to projects that never operate. If suppliers retain the removal, private sales can provide additional income.

An entitlement can exceed cost forecasts if many projects qualify. One rate may overpay lower-cost methods yet remain too small for costlier ones. Combining public payment and private sales without clear rules can mislead buyers about what their purchase achieved. Poor verification can reward fossil-source capture, which may avoid emissions but does not remove atmospheric CO₂, or temporary storage. Sudden caps or retrospective cuts can strand investments, while a low rate may change no decisions.

Monitoring & Evaluation The paying agency should compare claims with verified tonnes, projects and activity beyond what was expected without the policy. Cost, private revenue, payment delays, dominance by one method, escaped carbon and duplicate claims show whether the rate is effective and credible. Forecast overruns, weak uptake, overpayment or integrity failures should change future rates, entry deadlines, eligibility, audits or recovery rules.

Engagement should determine whether the payment is high enough to change investment decisions, how government and private buyers will divide ownership and claims, and whether applying for payment is workable. Evidence from suppliers, lenders and buyers should be tested against verification, registry and national-accounting requirements. Community and civil-society scrutiny is needed to strengthen safeguards, transparency and the distribution of support.

National legislatures can approve spending and assign an agency to verify removals and make payments. National governments also control greenhouse-gas accounting and authorise any transfer of removals toward another country’s climate target. Regions and states can establish their own entitlement where constitutional arrangements give them taxation or spending powers. A regional scheme may operate independently or add support to a national payment.