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Carbon Capture and Sequestration: How Much Does this Uncertain Option Affect Near-Term Policy Choices?

  • Valentina Bosetti

    (Fondazione Eni Enrico Mattei)

  • Laurent Gilotte

    (CIRED)

One of the main issues in the climate policy agenda, the timing of abatement efforts, hinges on the uncertainties of climate change risks and technological evolution. We use a stochastic optimization framework and jointly explore these two features. First, we embed in the model future potential large-scale availability of Carbon Capture and Storage (CCS) technologies. While non-CCS mitigation that reduces fossil energy use is modelled as exerting inertia on the economic system, mainly due to the durability of the capital in energy systems and to technology lock-in and lock-out phenomena, the implementation of CCS technologies is modelled as implying less resilience of the system to changes in policy directions. Second, climate uncertainty is related in the model to the atmospheric temperature response to an increase in GHGs concentration. Performing different simulation experiments, we find that the environmental target, derived from a cost-benefit analysis, should be more ambitious when CCS is included in the picture. Moreover, the possible future availability of CCS is not a reason to significantly reduce near-term optimal abatement efforts. Finally, the availability of better information on the climate cycle is in general more valuable than better information on the CCS technological option.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2005.86.

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Date of creation: Jun 2005
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Handle: RePEc:fem:femwpa:2005.86
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  1. Jean-Charles Hourcade & Philippe Ambrosi & St├ęphane Hallegatte & Franck Lecocq & Patrice Dumas & Minh Ha-Duong, 2003. "Optimal control models and elicitation of attitudes towards climate damages," Post-Print halshs-00000966, HAL.
  2. Peck, Stephen C. & Teisberg, Thomas J., 1993. "Global warming uncertainties and the value of information: an analysis using CETA," Resource and Energy Economics, Elsevier, vol. 15(1), pages 71-97, March.
  3. Akimoto, Keigo & Tomoda, Toshimasa & Fujii, Yasumasa & Yamaji, Kenji, 2004. "Assessment of global warming mitigation options with integrated assessment model DNE21," Energy Economics, Elsevier, vol. 26(4), pages 635-653, July.
  4. Pizer, William A., 2002. "Combining price and quantity controls to mitigate global climate change," Journal of Public Economics, Elsevier, vol. 85(3), pages 409-434, September.
  5. Minh Ha-Duong & David Keith, 2003. "Carbon storage: the economic efficiency of storing CO2 in leaky reservoirs," Post-Print halshs-00003927, HAL.
  6. Minh Ha-Duong & Patrice Dumas, 2004. "An abrupt stochastic damage function to analyse climate policy benefits," Post-Print halshs-00002451, HAL.
  7. Riahi, Keywan & Rubin, Edward S. & Taylor, Margaret R. & Schrattenholzer, Leo & Hounshell, David, 2004. "Technological learning for carbon capture and sequestration technologies," Energy Economics, Elsevier, vol. 26(4), pages 539-564, July.
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