Coal in Order to Reach Renewables: Carbon Capture, Synthetic Fuels, and the Atmospheric Ceiling

Mireille Chiroleu-Assouline () and Michel Moreaux
Additional contact information
Mireille Chiroleu-Assouline: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris
Michel Moreaux: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

PSE Working Papers from HAL

Abstract: We study the optimal use of energy from carbon emissions in an economy drawing useful energy from coal, a standard renewable, and methanol synthesised by combining captured CO 2 with an otherwise inexploitable non-standard renewable, subject to a ceiling on atmospheric carbon. Captured CO 2 carries a dual shadow value-atmospheric relief and productive feedstock-and we show that a credible ceiling is necessary and sufficient to activate the non-standard renewable: the ceiling, not any output subsidy, prices the feedstock that makes synthesis competitive. The optimal sequence departs from least-cost-first ordering, with coal and methanol used concurrently, and the preceiling energy price may follow a U-shaped path driven by a rising shadow value rather than falling costs. A uniform Pigouvian carbon tax does not decentralise the optimum; a supplementary storage subsidy is required, and the net capture instrument is a subsidy or tax according to whether emission reduction dominates the coal rebound.

Keywords: Global warming; Carbon capture and use; Synthetic fuels; Nonrenewable resources; Renewable resources (search for similar items in EconPapers)
Date: 2026-07
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-05703370v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://shs.hal.science/halshs-05703370v1/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:psewpa:halshs-05703370

Access Statistics for this paper

More papers in PSE Working Papers from HAL
Bibliographic data for series maintained by CCSD ().