We characterize the optimal exploitation paths of two perfect substitute primary energy resources, a non-renewable polluting resource and a carbon-free renewable one. Both resources can supply the energy needs of two sectors. Sector 1 is able to reduce its carbon footprint at a reasonable cost owing to a CCS device. Sector 2 has only access to the air capture technology, but at a significantly higher cost. We assume that the atmospheric carbon stock cannot exceed some given ceiling. We show that it is optimal to begin by fully capturing the sector 1's emissions before the ceiling is reached and next, to deploy the air capture in order to partially abate sector 2’s emissions. The optimal carbon tax is first increasing during the pre-ceiling phase and next, it declines in stages down to 0.
Climate change; Energy; CCS; Air capture; Carbon tax;
- Q32: Exhaustible Resources and Economic Development
- Q42: Alternative Energy Sources
- Q54: Climate • Natural Disasters • Global Warming
- Q58: Government Policy
Jean-Pierre Amigues, Gilles Lafforgue, and Michel Moreaux, “Des modes de capture du carbone et de la compétitivité relative des énergies primaires”, Économie et Prévision, n. 208-209, 2016, pp. 39–55.
TSE Working Paper, n. 13-392, April 2013