Conference Agenda

Carbon dioxide removal (CDR) is considered essential for climate change mitigation, yet its optimal role in climate policy remains unclear in the presence of non-permanent storage, energy constraints, and fossil fuel scarcity. We integrate CDR into an analytic integrated assessment model to derive general conditions for socially optimal CDR deployment. Within a linear carbon cycle model, we consider different CDR pathways, including direct air carbon capture, ocean alkalinity enhancement, and ocean iron fertilization. Introducing CDR does not significantly alter the optimal carbon price and the incentive to reduce emissions. The impact of CDR on gross emissions mainly stems from the energy required to operate it. This impact, as well as the optimal deployment of CDR, depends on fossil fuel scarcity and the pace of renewable energy deployment. In high-damage scenarios, the optimal deployment of CDR occurs before and around the year 2100, consistent with temperature overshoot pathways.

Nations are failing to meet the Paris Agreement, which relies on cooperative global action to avert the most dangerous impacts of climate change. We analyze an alternative strategy to fight global warming, showing that cooling our planet by solar geoengineering is effective even in a non-cooperative setting. We derive a first-of-a-kind quantitative integrated assessment model that solves the dynamic non-cooperative game amongst regions. It offers analytic solutions for the optimal deployment of solar geoengineering, contrasting the non-cooperative case with that of a global social planner. Moreover, we show analytically and quantitatively how geoengineering affects countries’ incentives to reduce greenhouse gas emissions. A plausible scenario suggests a non-cooperative equilibrium where one or two countries reduce temperatures to the Paris Agreement’s most stringent 1.5C target by 2100.

This paper studies climate policy and economic growth in a fragmented world economy in which countries adopt divergent environmental strategies. The model distinguishes between a proactive group implementing stringent climate policies and a lagging group refraining from mitigation because of perceived economic costs. A policy tipping mechanism arises when the economic performance of the proactive group overtakes that of the laggards, inducing the latter to adopt comparable climate measures. Using a macroeconomic growth model with endogenous innovation and energy transition dynamics, I show that policy tipping has large effects on global emissions but comparatively moderate effects on economic growth. The timing of the policy shift depends critically on policy design and technological progress. In a divided world, support for clean-energy innovation can outperform carbon pricing in accelerating global decarbonization because it induces earlier policy convergence across country groups. Achieving internationally agreed climate targets therefore requires proactive countries to combine ambitious emissions reductions with sustained economic performance, supported by an efficient mix of carbon pricing and innovation subsidies.

The energy transition is fundamentally a capital and technological transition. Countries face the joint challenge of expanding clean energy capacity while phasing down dirty assets in an orderly way to sustain growth, meet climate goals, and limit adjustment costs and stranded assets. While emission-intensive energy technologies still hold a productivity advantage, this gap is rapidly closing. Using a state-of-the-art growth model with sector- and technology-specific capital stocks, we compare optimal transition paths of an advanced industrialized economy to that of an emerging economy, using detailed calibrations stylized on the EU and India. In India’s context, rising demand and clean-technology catch-up drive immediate clean investment, with modest carbon pricing preventing a double transition of its energy capital stock. In the EU context, with limited remaining carbon budget, decommissioning high-emission legacy capital stock must begin immediately, and a higher carbon price is needed to drive the transition. For both jurisdictions, more ambitious climate policy entails modest economic losses, and carbon pricing outperforms net-zero mandates by reducing stranded assets and adjustment costs.