Kiel Working Papers, Kiel Institute for World Economics
No 1702:
The role of sequestration costs with a ceiling on atmospheric carbon concentration
Wilfried Rickels
Abstract: I investigate the optimal role of carbon sequestration for
mitigation in the presence of a ceiling on atmospheric carbon concentration
and consider aspects that have so far only been analyzed in the context of
a damage function to measure the consequences of climate change for
society. I assume extraction costs to be stock-dependent, replace the
proportional decay description of the global carbon cycle by a two-box
model, investigate the differences resulting from linear versus convex
sequestration costs, and consider oceanic instead of geological carbon
storage. Using a two-box model allows the non-renewable aspects of the
global carbon cycle to be accounted for and implies that carbon emissions
have to decline at the ceiling due to the ongoing saturation of the ocean
with respect to anthropogenic carbon. Convex sequestration costs result in
a continuous use of such a technology and allow the ceiling to be reached
later than without sequestration, whereas linear sequestration costs result
in a discontinuous use of such a technology and earlier reaching of the
ceiling. Consequently, taking into the account the uncertainties in
defining an appropriate ceiling, the policy recommendations with respect to
carbon sequestration differ crucially according to the underlying
assumptions of sequestration costs. Furthermore, the ocean might be a
storage option for captured carbon, but even though its storage capacity is
probably not scarce by itself, the ongoing saturation of the complete
carbon cycle has to be taken into account
Keywords: atmospheric ceiling, global carbon cycle, ocean sequestration; (follow links to similar papers)
JEL-Codes: Q30,; Q54; (follow links to similar papers)
28 pages, June 2011
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