The DICE model is one of the most influential Integrated Assessment Models available. Its founder Professor William Nordhaus was recently awarded Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel due to his pioneering work on the economics of climate change. In a recent paper in American Economic Journal: Economic Policy Nordhaus uses the model to conclude that a 2.5°C target is almost out of reach. In this paper we update DICE 2016 R2 with state-of-the art models of the carbon cycle, heat uptake into the oceans and the role of non-CO₂ forcers. We find that the allowable remaining carbon budget (over the period 2015-2100) to meet a 2.5°C target to be 2360 GtCO₂ whereas the estimate obtained using DICE 2016 R2 is about 460 GtCO₂. Nordhaus’s estimate of the remaining carbon budget for this target is hence five times lower than estimates made by our recalibrated version of DICE. We also compare our results with estimates by the Intergovernmental Panel on Climate Change (IPCC) and find our results to be in line with the carbon budgets presented in IPCC SR 1.5. We explain the reasons behind the difference between our result and that of Nordhaus and propose that an updated climate module in DICE is warranted.