Is Carbon Capture and Storage Socially Desirable under a Net-Zero Emission Target?

Yiwen Chen (), Nora Paulus () and Xi Wan ()
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Yiwen Chen: Shandong Agricultural University, Taiwan
Nora Paulus: DF, Université du Luxembourg
Xi Wan: International Joint Audit Institute

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: "Achieving Net-Zero emissions by 2050, in line with the Paris Agreement, has emerged as a binding constraint for climate policy, yet most dynamic models treat carbon neutrality as an endogenous outcome. This paper studies the role of Carbon Capture and Storage (CCS), as a representative case of abatement under terminal constraints, when the deadline for reaching the net-zero target (T) is exogenously fixed. We derive a closed-form welfare criterion that compares CCS-based and renewable-only transition pathways through the difference in inherited pollution damages at T. This criterion delivers policy-relevant results along three dimensions: (i) the net-zero date; (ii) learning-by-doing effects on CCS cost trajectories; and (iii) storage capacity requirements needed for CCS to remain welfare-desirable. Using a linear–quadratic framework calibrated to different target dates, we show that CCS dominates a renewable-only pathway whenever its transition period welfare gains are large enough to offset the higher post-transition climate damages it generates relative to renewables. We therefore derive a general welfare criterion linking transition emissions to terminal carbon stock under an exogenously imposed net-zero constraint. Our results provide decision-relevant thresholds for net-zero planning, complementing recent work on the timing of CCS deployment and the feasibility of negative emissions."

Keywords: "renewable energy; Pollution abatement; Irreversible pollution control; net-zero emission target" (search for similar items in EconPapers)
JEL-codes: Q54 Q58 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:26-10

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