Solar Geoengineering, Uncertainty, and the Price of Carbon

67 Pages Posted: 13 Jul 2015 Last revised: 9 May 2021

See all articles by Garth Heutel

Garth Heutel

University of North Carolina (UNC) at Greensboro - Department of Economics

Juan Moreno-Cruz

University of Waterloo - School of Environment, Enterprise and Development

Soheil Shayegh

RFF-CMCC European Institute on Economy and the Environment (EIEE)

Date Written: July 2015

Abstract

We consider the socially optimal use of solar geoengineering to manage climate change. Solar geoengineering can reduce damages from atmospheric greenhouse gas concentrations, potentially more cheaply than reducing emissions. If so, optimal policy includes less abatement than recommended by models that ignore solar geoengineering, and the price of carbon is lower. Solar geoengineering reduces temperature but does not reduce atmospheric or ocean carbon concentrations, and that carbon may cause damages apart from temperature increases. Finally, uncertainty over climate change and solar geoengineering alters the optimal deployment of solar geoengineering. We explore these issues with an analytical model and a numerical simulation. The price of carbon is 30%-45% lower than the price recommended in a model without geoengineering, depending on the parameterizations of geoengineering costs and benefits. Carbon concentrations are higher but temperature is lower when allowing for solar geoengineering. The optimal amount of solar geoengineering is more sensitive to climate uncertainty than is the optimal amount of abatement.

Suggested Citation

Heutel, Garth and Moreno-Cruz, Juan and Shayegh, Soheil, Solar Geoengineering, Uncertainty, and the Price of Carbon (July 2015). NBER Working Paper No. w21355, Available at SSRN: https://ssrn.com/abstract=2629962

Garth Heutel (Contact Author)

University of North Carolina (UNC) at Greensboro - Department of Economics ( email )

Greensboro, NC 27402-6165
United States

Juan Moreno-Cruz

University of Waterloo - School of Environment, Enterprise and Development ( email )

Waterloo, Ontario N2L 3G1
Canada

Soheil Shayegh

RFF-CMCC European Institute on Economy and the Environment (EIEE) ( email )

Via Bergognone, 34
Milan
Italy

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