Economic Assessment of the Development of CO2 Direct Reduction Technologies in Long-term Climate Strategies of the Gulf Countries

Frédéric Babonneau (), Ahmed Badran (), Maroua Benlahrech (), Alain Haurie, Maxime Schenckery and Marc Vielle
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Frédéric Babonneau: ORDECSYS, Universidad Adolfo Ibáñez [Santiago]
Ahmed Badran: Qatar University
Maroua Benlahrech: Qatar University
Alain Haurie: ORDECSYS, UNIGE - Université de Genève = University of Geneva, HEC Montréal - HEC Montréal

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Abstract: This paper proposes an assessment of long-term climate strategies for oil and gas producing countries – in particular, the Gulf Cooperation Council (GCC) member states– as regards the Paris agreement goal of limiting the increase of surface air temperature to 2°C by the end of the 21st century. The study evaluates the possible role of carbon dioxide removal (CDR) technologies under an international emissions trading market as a way to mitigate welfare losses. To model the strategic context, one assumes that a global cumulative emissions budget will have been allocated among different coalitions of countries – the GCC being one of them – and the existence of an international emissions trading market. A meta-game model is proposed in which deployment of CDR technologies as well as supply of emission rights are strategic variables and the payoffs are obtained from simulations of a General Equilibrium model. The results of the simulations indicate that oil and gas producing countries and especially the GCC countries face a significant welfare loss risk, due to "unburnable oil" if a worldwide climate regime as recommended by the Paris agreement is put in place. The development of CDR technologies, in particular Direct Air Capture (DAC) alleviates somewhat this risk and offers these countries a new opportunity for exploiting their gas reserves and the carbon storage capacity offered by depleted oil and gas reservoirs.

Keywords: GCC countries; Climate negotiations; Carbon dioxide removal; Financial compensation; Negative emissions; CDR technologies. (search for similar items in EconPapers)
Date: 2019-05
New Economics Papers: this item is included in nep-ara, nep-ene and nep-env
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Related works:
Journal Article: Economic assessment of the development of CO2 direct reduction technologies in long-term climate strategies of the Gulf countries (2021)
Working Paper: Economic Assessment of the Development of CO2 Direct Reduction Technologies in Long-Term Climate Strategies of the Gulf Countries (2021)
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