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The atmospheric carbon resilience problem : A theoretical analysis

  • Amigues, Jean-Pierre
  • Moreaux, Michel

We study a dynamic carbon pollution model where carbon accumulates both inside a nonrenewable and a renewable reservoir with a constant regeneration rate. Two primary energy sources are available: a cheap exhaustible fossil fuel (coal) and an expensive clean energy alternative (solar). To avoid catastrophic climate events, the global carbon concentration has to remain below some critical mandated ceiling. We show that there exists an upper bound on the coal endowment that can be consumed, which distinguishes two main cases: coal is initially abundant or scarce. If the energy sector has to provide a constant aggregate energy flow to the final users, cost-effectiveness requires that the global ceiling should be attained only when solar energy is introduced. Then the economy stays forever at the ceiling and coal use is progressively replaced by solar energy use. In the abundant coal case, this energy sources substitution process lasts for an infinite duration while in the scarce coal case, coal exploitation ends in finite time. Under a welfare maximization criterion, if coal is abundant, we show that the economy may follow a sequence of phases at the ceiling and below the ceiling before the final transition towards clean energy.

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Paper provided by LERNA, University of Toulouse in its series LERNA Working Papers with number 11.08.342.

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Date of creation: Mar 2011
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Handle: RePEc:ler:wpaper:24321
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  1. Jean Pierre Amigues & Gilles Lafforgue & Michel Moreaux, 2010. "Optimal capture and sequestration from the carbon emission flow and from the atmospheric carbon stock with heterogeneous energy consuming sectors," LERNA Working Papers 10.05.311, LERNA, University of Toulouse.
  2. CHAKRAVORTY Ujjayant & MOREAUX Michel & TIDBALL Mabel, 2006. "Ordering the Extraction of Polluting Nonrenewable Resources," LERNA Working Papers 06.19.212, LERNA, University of Toulouse.
  3. Clarke, Harry R. & Reed, William J., 1994. "Consumption/pollution tradeoffs in an environment vulnerable to pollution-related catastrophic collapse," Journal of Economic Dynamics and Control, Elsevier, vol. 18(5), pages 991-1010, September.
  4. Jean-Pierre AMIGUES & Michel MOREAUX & Katheline SCHUBERT, 2011. "Optimal Use of a Polluting non Renewable Ressource Generating Both Manageable and Catastrophic Damages," Annales d'Economie et de Statistique, ENSAE, issue 103-104, pages 107-142.
  5. Tahvonen, Olli & Withagen, Cees, 1996. "Optimality of irreversible pollution accumulation," Journal of Economic Dynamics and Control, Elsevier, vol. 20(9-10), pages 1775-1795.
  6. Forster, Bruce A., 1975. "Optimal pollution control with a nonconstant exponential rate of decay," Journal of Environmental Economics and Management, Elsevier, vol. 2(1), pages 1-6, September.
  7. Ujjayant Chakravorty & Bertrand Magne & Michel Moreaux, 2003. "A Hotelling Model with a Ceiling on the Stock of Pollution," Emory Economics 0321, Department of Economics, Emory University (Atlanta).
  8. Fabien Prieur & Mabel Tidball & Cees A. Withagen, 2011. "Optimal Emission-Extraction Policy in a World of Scarcity and Irreversibility," CESifo Working Paper Series 3512, CESifo Group Munich.
  9. Farzin, Y H & Tahvonen, O, 1996. "Global Carbon Cycle and the Optimal Time Path of a Carbon Tax," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 515-36, October.
  10. Toman, Michael & Withagen, Cees, 1998. "Accumulative Pollution, "Clean Technology," and Policy Design," Discussion Papers dp-98-43, Resources For the Future.
  11. Olli Tahvonen, 1997. "Fossil Fuels, Stock Externalities, and Backstop Technology," Canadian Journal of Economics, Canadian Economics Association, vol. 30(4), pages 855-74, November.
  12. Snorre Kverndokk, 1994. "Depletion of Fossil Fuels and the impact of Global Warming," Discussion Papers 107, Research Department of Statistics Norway.
  13. Cropper, M. L., 1976. "Regulating activities with catastrophic environmental effects," Journal of Environmental Economics and Management, Elsevier, vol. 3(1), pages 1-15, June.
  14. Tahvonen, Olli & Salo, Seppo, 1996. "Nonconvexities in Optimal Pollution Accumulation," Journal of Environmental Economics and Management, Elsevier, vol. 31(2), pages 160-177, September.
  15. repec:ner:tilbur:urn:nbn:nl:ui:12-3107026 is not listed on IDEAS
  16. Withagen, Cees, 1994. "Pollution and exhaustibility of fossil fuels," Resource and Energy Economics, Elsevier, vol. 16(3), pages 235-242, August.
  17. Ulph, Alistair & Ulph, David, 1994. "The Optimal Time Path of a Carbon Tax," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 857-68, Supplemen.
  18. repec:ner:tilbur:urn:nbn:nl:ui:12-3107033 is not listed on IDEAS
  19. Reyer Gerlagh, 2010. "Too Much Oil," Working Papers 2010.14, Fondazione Eni Enrico Mattei.
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