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Optimal Timing of Carbon Capture and Storage Policies - a Social Planner's View

Author

Listed:
  • Yiwen Chen

    (Université du Luxembourg (Extramural Research Fellow))

  • Xi Wan

    (Nanjing Audit University)

  • Benteng Zou

    (Université du Luxembourg)

Abstract

Carbon capture and storage (CCS) is considered one of the most realistic and plausi- ble options for reducing greenhouse gas (GHG) emissions from large pollution sources. However, CCS deployment is costly. This paper considers the social cost of CCS projects and GHG damage from a central planer's point of view, providing clear in- formation about when each player should deploy CCS. The findings are twofold: (1) given the heterogeneity of players, it is not socially optimal for all players to start CCS projects at the same time; instead, the player that has a cost advantage should start first; (2) it may be socially desirable for the player with a cost disadvantage never starts CCS. We show the conditions that support both possibilities. The second find- ing provides a clear policy guideline for the decision-maker: reduce the costs of the high-cost player in order to reduce global GHG emissions, provided that is the aim of the supranational institute

Suggested Citation

  • Yiwen Chen & Xi Wan & Benteng Zou, 2022. "Optimal Timing of Carbon Capture and Storage Policies - a Social Planner's View," DEM Discussion Paper Series 22-12, Department of Economics at the University of Luxembourg.
    • Handle: RePEc:luc:wpaper:22-12
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    File URL: http://hdl.handle.net/10993/51993
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    More about this item

    Keywords

    Carbon capture and storage; multistage optimal control; optimal timing.;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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