We consider a general equilibrium climate change model with two endogenous R&D sectors. First, we... more We consider a general equilibrium climate change model with two endogenous R&D sectors. First, we characterize the set of decentralized equilibria: to each vector of public tools – a carbon tax and a subsidy to each R&D sector – is associated a particular equilibrium. Second, we compute the optimal tools. Third, we perform various second-best analysis by imposing some constraints on one or several policy. The main results of the paper are the following: i) both a carbon tax and a green research subsidy contribute to the climate change mitigation; ii) R&D subsidies have a large impact on the consumption, and then on the social welfare, as compared with the carbon tax used alone; iii) those subsidies allow to spare the earlier generations who are, on the other hand, penalized by a carbon tax.
The paper considers an endogenous growth model with climate change as well as three R&D sectors d... more The paper considers an endogenous growth model with climate change as well as three R&D sectors dedicated to energy, CCS (Carbon Capture and Storage) and backstop efficiency. First, we characterize the set of decentralized equilibria: a particular equilibrium is associated with any vector of policy instruments including a carbon tax and a subsidy to each R&D sector. Second, we show that it is possible to express any equilibrium as the solution of a maximization program. Third, we solve the first-best optimum problem and thereby deriving the optimal instruments. Finally, we illustrate the theoretical model using calibrated functional specifications. In particular, we investigate the effects of various combinations of policy instruments (including the optimal ones) by determining the deviation of each corresponding equilibrium from the ‘‘laisser-faire’’ benchmark. We find notably that introducing an R&D subsidy hardly affects emissions when a carbon tax is already implemented, thus re...
Carbon capture and sequestration1 is a theoretical approach to mitigating the contri- bution of f... more Carbon capture and sequestration1 is a theoretical approach to mitigating the contri- bution of fossil fuel emissions to global warming, based on capturing carbon dioxide (CO2) from large point sources such as fossil fuel power plants. The carbon dioxide might then be permanently stored away from the atmosphere. Although CO2 can be injected into geological formations for various purposes, the
We develop a North/South growth model to investigate the normative question of international tran... more We develop a North/South growth model to investigate the normative question of international transfers to preserve tropical forests. The South converts forest lands into agricultural lands to produce a nal consumption good which is consumed by the North. We consider two ways of incorporating the externality coming from deforestation in the utility of the North: i) through an amenity value, which reects a continuous willingness to preserve forests, or ii) through a minimum stock of tropical forests to be preserved. First, we solve the optimal program and we characterize the dynamic properties of the optimal deforestation regime. Second, we derive the decentralized equilibrium outcome in which the externality can be corrected by a transfer scheme from the North to the South. This transfer function depends both on the stock of forest (positively) and on the deforestation rate (negatively). Third, we characterize the dynamic implementation rule which must be satised by this transfer to ...
We characterize the optimal exploitation paths of two primary energy resources. The first one is ... more We characterize the optimal exploitation paths of two primary energy resources. The first one is a non-renewable polluting resource, the second one a pollution-free renewable resource. Both resources can supply the energy needs of two sectors. Sector 1 is able to reduce the potential carbon emissions generated by its non-renewable energy consumption at a reasonable cost while sector 2 cannot. Another possibility is to capture the carbon spread in the atmosphere but at a significantly higher cost. We assume that the atmospheric carbon stock cannot exceed some given ceiling and that this constraint is effective. We show that there may exist paths along which it is optimal to begin by fully capturing the sector 1's potential emission flow before the ceiling constraint begins to be effective. Also there may exist optimal paths along which both capture devices have to be activated, in which case the potential emission flow of sector 1 is firrst fully abated and next the society must ...
Cet article s’intéresse à deux formes de distorsions pouvant empêcher le marché de fonctionner de... more Cet article s’intéresse à deux formes de distorsions pouvant empêcher le marché de fonctionner de manière optimale. La première est la pollution (CO2 principalement) provenant des énergies fossiles. La seconde est liée aux activités de R&D dans la mesure où les innovateurs sont généralement incapables de capturer la totalité de la rente associée à leur innovation. Pour corriger ces sources d’externalité, deux types d’instruments peuvent être utilisés : une taxe environnementale sur les émissions de carbone d’une part et des subventions à la recherche d’autre part. Or il s’avère qu’en équilibre général, ces instruments ont des interactions a priori complexes. L’objectif de l’article est de rappeler les principes économiques qui régissent la correction des externalités environnementales et de recherche, puis de présenter deux modèles « topdown » de croissance endogène apportant des éléments de réponse à la question de l’interaction des politiques publiques associées. Bien qu’ils diffè...
Nous caractérisons les sentiers optimaux d’exploitation de deux énergies primaires (charbon et so... more Nous caractérisons les sentiers optimaux d’exploitation de deux énergies primaires (charbon et solaire). Ces ressources approvisionnent les besoins énergétiques de deux secteurs, le premier pouvant recourir au CSC pour abattre ses émissions carbonées et le second n’ayant accès qu’à une technologie de capture atmosphérique nettement plus coûteuse. En imposant un seuil critique de pollution à ne pas dépasser, nous montrons qu’il est optimal de commencer à capturer pleinement les émissions du secteur 1 avant l’atteinte de ce seuil. La capture des émissions du secteur 2 n’intervient qu’une fois le plafond de pollution atteint et n’est que partielle. Enfin, la taxe carbone optimale doit être croissante durant la phase avant plafond, puis décroître par paliers jusqu’à zéro.
In order to encourage substitution of fossil fuels by cleaner renewables, regulatory agencies hav... more In order to encourage substitution of fossil fuels by cleaner renewables, regulatory agencies have implemented two types of Renewable Portfolio Standards (RPS). They have mandated the quantity of renewables as in the case of biofuels in the US. Or they have specied a minimum ratio of renewables in the energy supply mix as in the European biofuels mandate. This paper compares these two policies. We show that a quantity mandate requires a subsidy on renewable energy but a proportional mandate is equivalent to a tax-subsidy scheme that is revenue-neutral. When the energy demand is inelastic, the quantity mandate leads to a lower energy price, a larger subsidy on renewable energy and a smaller fossil fuel tax than the proportional mandate.
Carbon capture and storage (CCS) is one of the most credible climate change mit-igation options. ... more Carbon capture and storage (CCS) is one of the most credible climate change mit-igation options. Usually, in models where the atmospheric carbon stock is constrained by an institutional stabilization cap and under constant average CCS cost, the use of CCS must be delayed up to the time at which this cap is reached. In this paper, we show that, when CCS activities are submitted to decreasing returns to scale, the capture of carbon emissions must start earlier, i.e. before the climate constraint becomes to bind, but they must also be stopped strictly before the climate constraints ceases to be active. Depending on the solar energy costs, either the economy returns to dirty energy or there is a progressive rise of solar energy at the expense of abatement activities.
Using a standard Hotelling (1931) model of resource exploitation, we determine the optimal consum... more Using a standard Hotelling (1931) model of resource exploitation, we determine the optimal consumption paths of three energy resources: dirty coal, which is non-renewable and carbon-emitting; clean coal, which is also non-renewable but carbon-free as a result of CCS (Carbon Capture and Storage) abatement technology; 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 abatement technology, implying that the marginal CCS cost decreases in the cumulative consumption of clean coal. We show the following results: i) Learning-by-doing does not imply "early" capture, i.e. that clean coal exploitation cannot begin before the carbon cap has been reached; ii) The energy price path can evolve non-monotonically over time; iii) When the solar cost is low enough, there may exist an unusual energy consumption sequence along wh...
We consider a general equilibrium climate change model with two endogenous R&D sectors. First, we... more We consider a general equilibrium climate change model with two endogenous R&D sectors. First, we characterize the set of decentralized equilibria: to each vector of public tools – a carbon tax and a subsidy to each R&D sector – is associated a particular equilibrium. Second, we compute the optimal tools. Third, we perform various second-best analysis by imposing some constraints on one or several policy. The main results of the paper are the following: i) both a carbon tax and a green research subsidy contribute to the climate change mitigation; ii) R&D subsidies have a large impact on the consumption, and then on the social welfare, as compared with the carbon tax used alone; iii) those subsidies allow to spare the earlier generations who are, on the other hand, penalized by a carbon tax.
The paper considers an endogenous growth model with climate change as well as three R&D sectors d... more The paper considers an endogenous growth model with climate change as well as three R&D sectors dedicated to energy, CCS (Carbon Capture and Storage) and backstop efficiency. First, we characterize the set of decentralized equilibria: a particular equilibrium is associated with any vector of policy instruments including a carbon tax and a subsidy to each R&D sector. Second, we show that it is possible to express any equilibrium as the solution of a maximization program. Third, we solve the first-best optimum problem and thereby deriving the optimal instruments. Finally, we illustrate the theoretical model using calibrated functional specifications. In particular, we investigate the effects of various combinations of policy instruments (including the optimal ones) by determining the deviation of each corresponding equilibrium from the ‘‘laisser-faire’’ benchmark. We find notably that introducing an R&D subsidy hardly affects emissions when a carbon tax is already implemented, thus re...
Carbon capture and sequestration1 is a theoretical approach to mitigating the contri- bution of f... more Carbon capture and sequestration1 is a theoretical approach to mitigating the contri- bution of fossil fuel emissions to global warming, based on capturing carbon dioxide (CO2) from large point sources such as fossil fuel power plants. The carbon dioxide might then be permanently stored away from the atmosphere. Although CO2 can be injected into geological formations for various purposes, the
We develop a North/South growth model to investigate the normative question of international tran... more We develop a North/South growth model to investigate the normative question of international transfers to preserve tropical forests. The South converts forest lands into agricultural lands to produce a nal consumption good which is consumed by the North. We consider two ways of incorporating the externality coming from deforestation in the utility of the North: i) through an amenity value, which reects a continuous willingness to preserve forests, or ii) through a minimum stock of tropical forests to be preserved. First, we solve the optimal program and we characterize the dynamic properties of the optimal deforestation regime. Second, we derive the decentralized equilibrium outcome in which the externality can be corrected by a transfer scheme from the North to the South. This transfer function depends both on the stock of forest (positively) and on the deforestation rate (negatively). Third, we characterize the dynamic implementation rule which must be satised by this transfer to ...
We characterize the optimal exploitation paths of two primary energy resources. The first one is ... more We characterize the optimal exploitation paths of two primary energy resources. The first one is a non-renewable polluting resource, the second one a pollution-free renewable resource. Both resources can supply the energy needs of two sectors. Sector 1 is able to reduce the potential carbon emissions generated by its non-renewable energy consumption at a reasonable cost while sector 2 cannot. Another possibility is to capture the carbon spread in the atmosphere but at a significantly higher cost. We assume that the atmospheric carbon stock cannot exceed some given ceiling and that this constraint is effective. We show that there may exist paths along which it is optimal to begin by fully capturing the sector 1's potential emission flow before the ceiling constraint begins to be effective. Also there may exist optimal paths along which both capture devices have to be activated, in which case the potential emission flow of sector 1 is firrst fully abated and next the society must ...
Cet article s’intéresse à deux formes de distorsions pouvant empêcher le marché de fonctionner de... more Cet article s’intéresse à deux formes de distorsions pouvant empêcher le marché de fonctionner de manière optimale. La première est la pollution (CO2 principalement) provenant des énergies fossiles. La seconde est liée aux activités de R&D dans la mesure où les innovateurs sont généralement incapables de capturer la totalité de la rente associée à leur innovation. Pour corriger ces sources d’externalité, deux types d’instruments peuvent être utilisés : une taxe environnementale sur les émissions de carbone d’une part et des subventions à la recherche d’autre part. Or il s’avère qu’en équilibre général, ces instruments ont des interactions a priori complexes. L’objectif de l’article est de rappeler les principes économiques qui régissent la correction des externalités environnementales et de recherche, puis de présenter deux modèles « topdown » de croissance endogène apportant des éléments de réponse à la question de l’interaction des politiques publiques associées. Bien qu’ils diffè...
Nous caractérisons les sentiers optimaux d’exploitation de deux énergies primaires (charbon et so... more Nous caractérisons les sentiers optimaux d’exploitation de deux énergies primaires (charbon et solaire). Ces ressources approvisionnent les besoins énergétiques de deux secteurs, le premier pouvant recourir au CSC pour abattre ses émissions carbonées et le second n’ayant accès qu’à une technologie de capture atmosphérique nettement plus coûteuse. En imposant un seuil critique de pollution à ne pas dépasser, nous montrons qu’il est optimal de commencer à capturer pleinement les émissions du secteur 1 avant l’atteinte de ce seuil. La capture des émissions du secteur 2 n’intervient qu’une fois le plafond de pollution atteint et n’est que partielle. Enfin, la taxe carbone optimale doit être croissante durant la phase avant plafond, puis décroître par paliers jusqu’à zéro.
In order to encourage substitution of fossil fuels by cleaner renewables, regulatory agencies hav... more In order to encourage substitution of fossil fuels by cleaner renewables, regulatory agencies have implemented two types of Renewable Portfolio Standards (RPS). They have mandated the quantity of renewables as in the case of biofuels in the US. Or they have specied a minimum ratio of renewables in the energy supply mix as in the European biofuels mandate. This paper compares these two policies. We show that a quantity mandate requires a subsidy on renewable energy but a proportional mandate is equivalent to a tax-subsidy scheme that is revenue-neutral. When the energy demand is inelastic, the quantity mandate leads to a lower energy price, a larger subsidy on renewable energy and a smaller fossil fuel tax than the proportional mandate.
Carbon capture and storage (CCS) is one of the most credible climate change mit-igation options. ... more Carbon capture and storage (CCS) is one of the most credible climate change mit-igation options. Usually, in models where the atmospheric carbon stock is constrained by an institutional stabilization cap and under constant average CCS cost, the use of CCS must be delayed up to the time at which this cap is reached. In this paper, we show that, when CCS activities are submitted to decreasing returns to scale, the capture of carbon emissions must start earlier, i.e. before the climate constraint becomes to bind, but they must also be stopped strictly before the climate constraints ceases to be active. Depending on the solar energy costs, either the economy returns to dirty energy or there is a progressive rise of solar energy at the expense of abatement activities.
Using a standard Hotelling (1931) model of resource exploitation, we determine the optimal consum... more Using a standard Hotelling (1931) model of resource exploitation, we determine the optimal consumption paths of three energy resources: dirty coal, which is non-renewable and carbon-emitting; clean coal, which is also non-renewable but carbon-free as a result of CCS (Carbon Capture and Storage) abatement technology; 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 abatement technology, implying that the marginal CCS cost decreases in the cumulative consumption of clean coal. We show the following results: i) Learning-by-doing does not imply "early" capture, i.e. that clean coal exploitation cannot begin before the carbon cap has been reached; ii) The energy price path can evolve non-monotonically over time; iii) When the solar cost is low enough, there may exist an unusual energy consumption sequence along wh...
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