To Deploy or Not to Deploy CCS Abatement, and When: A Differential Game Perspective

Carbon capture and storage (CCS) can be considered as one of the key tools in the fight
against climate change, providing a promising method to reduce human-generated CO2
emissions. Despite its potential, the high cost of CCS deployment leads to an uneven
adoption across countries. This paper employs a differential game model with hetero geneous countries facing transboundary pollution to determine the optimal timing to
initiate CCS projects, and delivers analytical results for the existence of Markov Per fect Equilibria and the numerical illustration. We show that: (1) The trigger threshold
for CCS deployment depends not only on a country’s own costs, but also on the costs
of other countries and the costs associated with pollution damage. (2) The optimal
timing for different countries to initiate their CCS projects occurs when a country’s
pollution level reaches a critical threshold. (3) Countries are more inclined to free ride on the pollution abatement efforts of others when the pollution damage costs are
symmetric rather than asymmetric. (4) Finally, we provide sufficient conditions under
which some countries refrain from engaging in CCS, despite facing the same pollution
damage costs as others.