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The atmospheric carbon resilience problem: A theoretical analysis

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  • Amigues, Jean-Pierre
  • Moreaux, Michel

Abstract

We study a dynamic carbon pollution model where carbon accumulates both inside a nonrenewable and a renewable reservoir with a constant regeneration rate. Two primary energy sources are available: a cheap exhaustible fossil fuel (coal) and an expensive clean energy alternative (solar). To avoid catastrophic climate events, the global carbon concentration has to remain below some critical mandated ceiling. We show that there exists an upper bound on the coal endowment that can be consumed, which distinguishes two main cases: coal is initially abundant or scarce. If the energy sector has to provide a constant aggregate energy flow to the final users, cost-effectiveness requires that the global ceiling should be attained only when solar energy is introduced. Then the economy stays forever at the ceiling and coal use is progressively replaced by solar energy use. In the abundant coal case, this energy sources substitution process lasts for an infinite duration while in the scarce coal case, coal exploitation ends in finite time. Under a welfare maximization criterion, if coal is abundant, we show that the economy may follow a sequence of phases at the ceiling and below the ceiling before the final transition towards clean energy.

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Bibliographic Info

Article provided by Elsevier in its journal Resource and Energy Economics.

Volume (Year): 35 (2013)
Issue (Month): 4 ()
Pages: 618-636

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Handle: RePEc:eee:resene:v:35:y:2013:i:4:p:618-636

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Web page: http://www.elsevier.com/locate/inca/505569

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Keywords: Climate change; Carbon pollution; Carbon reservoirs; Carbon ceiling; Fossil fuels; Clean energy;

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References

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  1. Tahvonen, Olli & Salo, Seppo, 1996. "Nonconvexities in Optimal Pollution Accumulation," Journal of Environmental Economics and Management, Elsevier, vol. 31(2), pages 160-177, September.
  2. Jean-Pierre AMIGUES & Michel MOREAUX & Katheline SCHUBERT, 2011. "Optimal Use of a Polluting non Renewable Ressource Generating Both Manageable and Catastrophic Damages," Annales d'Economie et de Statistique, ENSAE, issue 103-104, pages 107-142.
  3. Tahvonen, Olli & Withagen, Cees, 1996. "Optimality of irreversible pollution accumulation," Journal of Economic Dynamics and Control, Elsevier, vol. 20(9-10), pages 1775-1795.
  4. Farzin, Y H & Tahvonen, O, 1996. "Global Carbon Cycle and the Optimal Time Path of a Carbon Tax," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 515-36, October.
  5. Hoel, Michael & Kverndokk, Snorre, 1996. "Depletion of fossil fuels and the impacts of global warming," Resource and Energy Economics, Elsevier, vol. 18(2), pages 115-136, June.
  6. Prieur, Fabien & Tidball, Mabel & Withagen, Cees, 2013. "Optimal emission-extraction policy in a world of scarcity and irreversibility," Resource and Energy Economics, Elsevier, vol. 35(4), pages 637-658.
  7. Jean Pierre Amigues & Gilles Lafforgue & Michel Moreaux, 2010. "Optimal capture and sequestration from the carbon emission flow and from the atmospheric carbon stock with heterogeneous energy consuming sectors," LERNA Working Papers 10.05.311, LERNA, University of Toulouse.
  8. Olli Tahvonen, 1997. "Fossil Fuels, Stock Externalities, and Backstop Technology," Canadian Journal of Economics, Canadian Economics Association, vol. 30(4), pages 855-74, November.
  9. Clarke, Harry R. & Reed, William J., 1994. "Consumption/pollution tradeoffs in an environment vulnerable to pollution-related catastrophic collapse," Journal of Economic Dynamics and Control, Elsevier, vol. 18(5), pages 991-1010, September.
  10. Toman, Michael A. & Withagen, Cees, 2000. "Accumulative pollution, "clean technology," and policy design," Resource and Energy Economics, Elsevier, vol. 22(4), pages 367-384, October.
  11. Chakravorty, Ujjayant & Moreaux, Michel & Tidball, Mabel, 2006. "Ordering the Extraction of Polluting Nonrenewable Resources," IDEI Working Papers 415, Institut d'Économie Industrielle (IDEI), Toulouse.
  12. Withagen, Cees, 1994. "Pollution and exhaustibility of fossil fuels," Resource and Energy Economics, Elsevier, vol. 16(3), pages 235-242, August.
  13. Ujjayant Chakravorty & Bertrand Magne & Michel Moreaux, 2003. "A Hotelling Model with a Ceiling on the Stock of Pollution," Emory Economics 0321, Department of Economics, Emory University (Atlanta).
  14. Cropper, M. L., 1976. "Regulating activities with catastrophic environmental effects," Journal of Environmental Economics and Management, Elsevier, vol. 3(1), pages 1-15, June.
  15. Forster, Bruce A., 1975. "Optimal pollution control with a nonconstant exponential rate of decay," Journal of Environmental Economics and Management, Elsevier, vol. 2(1), pages 1-6, September.
  16. Reyer Gerlagh, 2010. "Too Much Oil," Working Papers 2010.14, Fondazione Eni Enrico Mattei.
  17. Ulph, Alistair & Ulph, David, 1994. "The Optimal Time Path of a Carbon Tax," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 857-68, Supplemen.
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Cited by:
  1. Prieur, Fabien & Tidball, Mabel & Withagen, Cees, 2013. "Optimal emission-extraction policy in a world of scarcity and irreversibility," Resource and Energy Economics, Elsevier, vol. 35(4), pages 637-658.
  2. Moreaux, Michel & Withagen, Cees, 2013. "Climate Change and Carbon Capture and Storage," LERNA Working Papers 13.03.390, LERNA, University of Toulouse.
  3. Michel Moreaux & Cees Withagen, 2014. "Fluctuating Climate Changes Induced by Optimal Carbon Capturing Policies," Working Papers 2014.01, FAERE - French Association of Environmental and Resource Economists, revised May 2014.
  4. Chakravorty, Ujjayant & Leach, Andrew & Moreaux, Michel, 2012. "Cycles in nonrenewable resource prices with pollution and learning-by-doing," Journal of Economic Dynamics and Control, Elsevier, vol. 36(10), pages 1448-1461.

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