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Optimal timing of carbon capture policies under learning-by-doing

Author

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

Abstract

Using a standard Hotelling model of resource exploitation, we determine the optimal energy consumption paths from three options: dirty coal, which is non-renewable and carbon-emitting; clean coal, which is also non-renewable but carbon-free thanks to carbon capture and storage (CCS); and solar energy, which is renewable and carbon-free. We assume that the atmospheric carbon stock cannot exceed an exogenously given ceiling. Taking into account learning-by-doing in CCS technology, we show the following results: (i) clean coal exploitation cannot begin before the outset of the carbon constrained phase and must stop strictly before the end of this phase; (ii) the energy price path can evolve non-monotonically over time; and (iii) when the solar cost is low enough, an unusual energy consumption sequence along with solar energy is interrupted for some time and replacement by clean coal may exist.

Suggested Citation

  • Amigues, Jean-Pierre & Lafforgue, Gilles & Moreaux, Michel, 2016. "Optimal timing of carbon capture policies under learning-by-doing," Journal of Environmental Economics and Management, Elsevier, vol. 78(C), pages 20-37.
  • Handle: RePEc:eee:jeeman:v:78:y:2016:i:c:p:20-37
    DOI: 10.1016/j.jeem.2016.02.002
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    References listed on IDEAS

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    More about this item

    Keywords

    Climate change; Energy substitution; Carbon capture and storage; Learning-by-doing;

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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