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Evaluating Carbon Capture And Storage In A Climate Model With Endogenous Technical Change

Author

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  • TUNÇ DURMAZ

    (Department of Economics, Yildiz Technical University, Istanbul, Turkey)

  • FRED SCHROYEN

    (#x2020;Department of Economics, Norwegian School of Economics, Bergen, Norway)

Abstract

We assess the extent to which Carbon Capture and Storage (CCS) and R&D on this abatement technology are part of a socially efficient solution to the problem of climate change. For this purpose, we extend the intertemporal model of climate and directed technical change developed by Acemoglu et al. (2012) [The environment and directed technical change. American Economic Review, 102(1), 131–166] to include a sector responsible for CCS. We show that two types of solutions exist: a renewable energy regime where current CCS technology is only temporarily used but never further developed; and a fossil energy regime where CCS is part of a long-term solution and is further developed at about the same rate as fossil energy technology. Our computations show that for current estimates of the marginal cost of CCS, the renewable energy regime clearly dominates the fossil fuel energy regime.

Suggested Citation

  • Tunç Durmaz & Fred Schroyen, 2020. "Evaluating Carbon Capture And Storage In A Climate Model With Endogenous Technical Change," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 11(01), pages 1-47, February.
    • Handle: RePEc:wsi:ccexxx:v:11:y:2020:i:01:n:s2010007820500037
    DOI: 10.1142/S2010007820500037
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    1. repec:spo:wpmain:info:hdl:2441/14g286e42n8bl9is6h16b18kes is not listed on IDEAS
    2. Moreaux, Michel & Amigues, Jean-Pierre & van der Meijden, Gerard & Withagen, Cees, 2024. "Carbon capture: Storage vs. Utilization," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    3. Jonathon M. Becker & Jared C. Carbone & Andreas Löschel, 2025. "Induced Innovation and Carbon Leakage," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 88(9), pages 2357-2401, September.
    4. Lamperti, Francesco & Napoletano, Mauro & Roventini, Andrea, 2020. "Green Transitions And The Prevention Of Environmental Disasters: Market-Based Vs. Command-And-Control Policies," Macroeconomic Dynamics, Cambridge University Press, vol. 24(7), pages 1861-1880, October.
    5. Wiskich, Anthony, 2024. "A carbon tax versus clean subsidies: Optimal and suboptimal policies for the clean transition," Energy Economics, Elsevier, vol. 132(C).

    More about this item

    Keywords

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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • 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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