Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282876 
Year of Publication: 
2023
Series/Report no.: 
Tinbergen Institute Discussion Paper No. TI 2023-063/VI
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
We explore how optimal emission abatement trajectories are affected by dynamic characteristics of greenhouse-gas emitting systems, such as inertia, induced innovation, and pathdependency, by formulating a compact and analytically tractable model with stylized damage assumptions to derive the optimal cost-benefit pathway. Our analytic solutions highlight how simple dynamic parameters affect the optimal abatement trajectory (including the optimal current effort and the cost of delay). The conventional cost-benefit result (i.e., an optimal policy with rising marginal costs that reflects discounted climate damages) arises only as a special case in which the dynamic characteristics of emitting systems are assumed to be insignificant. More generally, our model yields useful policy insights for the transition to deep decarbonization, showing that enhanced early action may greatly reduce both damages and abatement costs in the long run.
Subjects: 
abatement
DICE
energy economics
inertia
innovation
path dependence
transition
JEL: 
C61
O30
Q54
Document Type: 
Working Paper

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