On the Way to Net Zero. But Which Way?

Riyad Abbas, Nicolas Carnot, Matthieu Lequien, Alain Quartier-la-Tente and Sébastien Roux ()

Economie et Statistique / Economics and Statistics, 2024, issue 544, 3-26

Abstract: [eng] Based on an optimal investment choice model, we describe the optimal transitions to carbon neutrality that are in line with climate-related constraints such as one-off greenhouse gas emission caps or a cap on cumulative emissions. We show that i) the early scrapping of brown capital – greenhouse gas emitters – cannot occur with one-off targets; ii) in order to limit global warming to a given level, the explicit introduction of such a constraint in the form of a cumulative emissions total not to be exceeded minimizes the associated economic cost, resulting in an initially high level of scrapping with limited cumulative emissions. Well-chosen regular emissions caps from the first year result in a similar trajectory; iii) with a given cumulative emissions constraint, delaying the transition increases both costs and scrapping; iv) the total annual investment during and after the transition is lower than that of the initial state.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:nse:ecosta:ecostat_2024_544_1

DOI: 10.24187/ecostat.2024.544.2121

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