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Optimal Timing of Carbon-Capture Policies Among Different Countries Under Markovian Competition
Chen, Yiwen; Wan, Xi; Zou, Benteng
2023
 

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Keywords :
Carbon capture and storage; differential game
Abstract :
[en] Carbon capture and storage (CCS) is considered one of the most important and efficient tools in fighting against greenhouse gas emissions. Countries differ in terms of the level CCS processes implemented, with the main barrier to CCS adoption being its high cost. This paper introduces a differential game model with heterogeneous countries to investigate the optimal timing for countries to initiate CCS projects, taking into account CCS costs. We show that (i) the thresholds for the triggering of CCS projects depend not only on one's own CCS costs but also those of others, in addition to the pollution damage costs; (ii) the optimal timing for different countries to initiate their CCS projects is the moment when their threshold level of pollution stock is reached; (iii) countries are more inclined to free-ride by both reducing pollutant emissions and deploying CCS when pollution damage costs are symmetric rather than asymmetric; finally, (iv) we provide sufficient conditions under which some countries never deploy CCS even though they bear the same pollution damage as the others.
Disciplines :
Quantitative methods in economics & management
Author, co-author :
Chen, Yiwen
Wan, Xi
Zou, Benteng  ;  University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM)
Language :
English
Title :
Optimal Timing of Carbon-Capture Policies Among Different Countries Under Markovian Competition
Publication date :
May 2023
Number of pages :
39
Focus Area :
Sustainable Development
Available on ORBilu :
since 18 September 2023

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