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Optimal Timing of Carbon Capture and Storage Policies Under Learning-by-doing

Author

Listed:
  • Amigues, Jean-Pierre
  • Lafforgue, Gilles
  • Moreaux, Michel
Abstract
Using a standard Hotelling model of resource exploitation, we determine the optimal consumption paths of three energy resources: dirty coal, which is depletable and carbon-emitting; clean coal, which is also depletable but carbon-free thanks to an abatement technology (CCS: Carbon Capture and Storage), and solar energy which is renewable and carbon-free. Carbon emissions are released into the atmosphere and we assume that the atmospheric carbon stock cannot exceed a given ceiling. We consider learning-by-doing in the abatement technology, implying that the marginal CCS cost is decreasing in the cumulative consumption of clean coal. We show the following results. i) Learning-by-doing does not imply "early" capture, i.e. the clean coal exploitation must begin at the earliest once the carbon cap is reached. ii) The energy price path can evolve non-monotonically over time. iii) When the solar cost is low enough, there may exist unusual energy consumption sequence along which solar energy is interrupted for some time and replaced by clean coal.

Suggested Citation

  • Amigues, Jean-Pierre & Lafforgue, Gilles & Moreaux, Michel, 2014. "Optimal Timing of Carbon Capture and Storage Policies Under Learning-by-doing," IDEI Working Papers 824, Institut d'Économie Industrielle (IDEI), Toulouse, revised May 2014.
    • Handle: RePEc:ide:wpaper:27921
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    References listed on IDEAS

    as
    1. Jean-Pierre Amigues & Michel Moreaux & Katheline Schubert, 2011. "Optimal Use of a Polluting Non-Renewable Resource Generating both Manageable and Catastrophic Damages," Annals of Economics and Statistics, GENES, issue 103-104, pages 107-141.
    2. Amigues, Jean-Pierre & Lafforgue, Gilles & Moreaux, Michel, 2012. "Optimal Timing of Carbon Capture Policies Under Alternative CCS Cost Functions," TSE Working Papers 12-318, Toulouse School of Economics (TSE).
    3. repec:adr:anecst:y:2011:i:103-104:p:07 is not listed on IDEAS
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    Cited by:

    1. Amigues, Jean-Pierre & Lafforgue, Gilles & Moreaux, Michel, 2014. "Optimal Timing of CCS Policies under Decreasing Returns to Scale," TSE Working Papers 14-529, Toulouse School of Economics (TSE).

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    More about this item

    Keywords

    Climate change; Energy substitution; Carbon Capture and Storage; Learning-by-doing;
    All these keywords.

    JEL classification:

    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • 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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