Arbeitspapier
The role of carbon capture and sequestration policies for climate change mitigation
This paper takes the policy failure in establishing a global carbon price for efficient emissions reduction as a starting point and analyzes to what extent technology policies can be a reasonable second-best approach. From a supply-side perspective, carbon capture and storage (CCS) policies differ substantially from renewable energy policies: they increase fossil resource demand and simultaneously lower emissions. We show in a theoretical model that, under idealized conditions, a pure CCS subsidy can be as efficient as a carbon tax. Within a numerical dynamic general equilibrium model, we analyze CCS and renewable energy policies under more realistic parameter settings for imperfect or missing carbon prices. We find that in contrast to renewable energy policies, CCS policies are not always capable of reducing emissions in the long run. If feasible, CCS policies carry often lower social costs compared to renewable energy policies. In case fossil resources are abundant and renewable energy costs low, renewable energy policies perform better. Our results indicate that a pure CCS policy or a pure renewable energy policy carry specific risks of missing the environmental target. A smart combination of both, however, can be a robust and low-cost temporary second-best policy.
- Language
-
Englisch
- Bibliographic citation
-
Series: CESifo Working Paper ; No. 3834
- Classification
-
Wirtschaft
Nonrenewable Resources and Conservation: Demand and Supply; Prices
Nonrenewable Resources and Conservation: Government Policy
Energy: General
Climate; Natural Disasters and Their Management; Global Warming
Environmental Economics: Government Policy
- Subject
-
renewable energy subsidy
supply-side dynamics
green paradox
carbon pricing
global warming
CCS
Klimaschutz
Förderung regenerativer Energien
Kohlenstoffsenke
Subvention
Second Best
Theorie
- Event
-
Geistige Schöpfung
- (who)
-
Kalkuhl, Matthias
Edenhofer, Ottmar
Lessmann, Kai
- Event
-
Veröffentlichung
- (who)
-
Center for Economic Studies and ifo Institute (CESifo)
- (where)
-
Munich
- (when)
-
2012
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Kalkuhl, Matthias
- Edenhofer, Ottmar
- Lessmann, Kai
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2012
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