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Evaluating Carbon Capture and Storage in a Climate Model with Endogenous Technical Change

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  • Schroyen, Fred

    () (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Durmaz, Tunc

    () (Yildiz Technical University, Istanbul)

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, American Economic Review, 102(1): 131–66) 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

  • Schroyen, Fred & Durmaz, Tunc, 2013. "Evaluating Carbon Capture and Storage in a Climate Model with Endogenous Technical Change," Discussion Paper Series in Economics 22/2019, Norwegian School of Economics, Department of Economics, revised 16 Oct 2019.
  • Handle: RePEc:hhs:nhheco:2019_022
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    File URL: http://hdl.handle.net/11250/2625591
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    Cited by:

    1. Francesco Lamperti & Mauro Napoletano & Andrea Roventini, 2019. "Green transitions and the prevention of environmental disasters : market based vs command-and-control policies," Sciences Po publications info:hdl:2441/14g286e42n8, Sciences Po.

    More about this item

    Keywords

    carbon capture and storage; renewable energy; fossil fuel energy; endogenous technical change; climate change;

    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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