The Influence of Negative Emission Technologies and Technology Policies on the Optimal Climate Mitigation Portfolio

Abstract:     
Combining policies to remove carbon dioxide (CO2) from the atmosphere with policies to reduce emissions could decrease CO2 concentrations faster than possible via natural processes. We model the optimal selection of a dynamic portfolio of abatement, research and development (R&D), and negative emission policies under an exogenous CO2 constraint and with stochastic technological change. We find that near-term abatement is not sensitive to the availability of R&D policies, but the anticipated availability of negative emission strategies can reduce the near-term abatement optimally undertaken to meet 2 degrees C temperature limits. Further, planning to deploy negative emission technologies shifts optimal R&D funding from "carbon-free" technologies into "emission intensity" technologies. Making negative emission strategies available enables an 80% reduction in the cost of keeping year 2100 CO2 concentrations near their current level. However, negative emission strategies are less important if the possibility of tipping points rules out using late-century net negative emissions to temporarily overshoot the CO2 constraint earlier in the century.

Number of Pages in PDF File: 24

Keywords: Abatement, Air capture, BECCS, Carbon capture, Climate policy, Mitigation, Portfolio, R&D, Technological change, Tipping points

JEL Classification: O38, Q54, Q55

working papers series