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Optimal timing of CCS policies with heterogeneous energy consumption sectors

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  • Amigues, Jean-Pierre
  • Lafforgue, Gilles
  • Moreaux, Michel

Abstract

Using the Chakravorty et al. (J Econ Dyn Control 30:2875–2904, 2006 ) ceiling model, we characterize the optimal consumption paths of three energy resources: dirty oil, which is non-renewable and carbon emitting; clean oil, which is also non-renewable but carbon-free thanks to an abatement technology, and solar energy, which is renewable and carbon-free. The resulting energy-mix can supply the energy needs of two sectors. These sectors differ in the additional abatement cost they have to pay for consuming clean rather than dirty oil, as Sector 1 (industry) can abate its emissions at a lower cost than Sector 2 (transport). We show that it is optimal to begin by fully capturing Sector 1’s emissions before the ceiling is reached. Also, there may be optimal paths along which the capture devices of both sectors must be activated. In this case, Sector’s 1 emissions are fully abated first, before Sector 2 abates partially. Finally, we discuss the way heterogeneity of abatement costs causes sectoral energy price paths to differ. Copyright Springer Science+Business Media Dordrecht 2014

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Paper provided by LERNA, University of Toulouse in its series LERNA Working Papers with number 12.13.370.

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Date of creation: 23 Jul 2012
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Handle: RePEc:ler:wpaper:26049

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  1. Ujjayant Chakravorty & Andrew Leach & Michel MOREAUX, 2010. "Would Hotelling Kill the Electric Car?," LERNA Working Papers 10.08.314, LERNA, University of Toulouse.
  2. Toman, Michael & Withagen, Cees, 1998. "Accumulative Pollution, "Clean Technology," and Policy Design," Discussion Papers dp-98-43, Resources For the Future.
  3. Amigues, Jean-Pierre & Moreaux, Michel & Schubert, Katheline, 2011. "Optimal use of a polluting non renewable resource generating both manageable and catastrophic damages," LERNA Working Papers 11.10.344, LERNA, University of Toulouse.
  4. Amigues, Jean-Pierre & Lafforgue, Gilles & Moreaux, Michel, 2012. "Optimal Timing of Carbon Capture Policies Under Alternative CCS Cost Functions," IDEI Working Papers 727, Institut d'Économie Industrielle (IDEI), Toulouse.
  5. Chakravorty, Ujjayant & Magné, Bertrand & Moreaux, Michel, 2005. "A Hotelling Model with a Ceiling on the Stock of Pollution," IDEI Working Papers 368, Institut d'Économie Industrielle (IDEI), Toulouse.
  6. Snorre Kverndokk, 1994. "Depletion of Fossil Fuels and the impact of Global Warming," Discussion Papers 107, Research Department of Statistics Norway.
  7. Coulomb, R. & Henriet, F., 2011. "Carbon price and optimal extraction of a polluting fossil fuel with restricted carbon capture," Working papers 322, Banque de France.
  8. Herzog, Howard J., 2011. "Scaling up carbon dioxide capture and storage: From megatons to gigatons," Energy Economics, Elsevier, vol. 33(4), pages 597-604, July.
  9. Reyer Gerlagh & Bob van der Zwaan, 2006. "Options and Instruments for a Deep Cut in CO2 Emissions: Carbon Dioxide Capture or Renewables, Taxes or Subsidies?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 25-48.
  10. repec:hal:wpaper:halshs-00564852 is not listed on IDEAS
  11. Lafforgue, Gilles & Magné, Bertrand & Moreaux, Michel, 2006. "Optimal Sequestration Policy with a Ceiling on the Stock of Carbon in the Atmosphere," IDEI Working Papers 401, Institut d'Économie Industrielle (IDEI), Toulouse.
  12. Olli Tahvonen, 1997. "Fossil Fuels, Stock Externalities, and Backstop Technology," Canadian Journal of Economics, Canadian Economics Association, vol. 30(4), pages 855-74, November.
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Cited by:
  1. Bouwe Dijkstra & Maria J. Gil-Moltó, 2014. "Is Emission Intensity or Output U-shaped in the Strictness of Environmental Policy," CESifo Working Paper Series 4833, CESifo Group Munich.

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