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Optimal Timing of CCS Policies under Decreasing Returns to Scale

Jean-Pierre Amigues (), Gilles Lafforgue and Michel Moreaux

No 14-529, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: Carbon capture and sequestration (CCS) can help to mitigate the climate change transition. Usually, in models where the atmospheric carbon stock is constrained by an institutional stabilization cap and under constant average CCS cost, the use of CCS must be delayed up to the time at which the constraint begins to be e@ective. In this paper, we show that, when abatement activity are submitted to decreasing returns to scale, abatement must start earlier, before the climate constraint becomes to bind, but they must also be stopped strictly before the climate constraints ceases to be active. Depending on the solar energy costs, either there is a return toward dirty energy or either a progressive rise of solar energy at the expense of abatement activities.

Keywords: Energy resources; carbon stabilization cap; carbon capture and storage; decreasing returns to scale (search for similar items in EconPapers)
JEL-codes: Q32 Q42 Q54 Q58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-env
Date: 2014-05
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Published in Journal of Environmental Economics and Management, vol. 78, juillet 2016, p. 23-37.

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