Some Implications of Improved CO2 Emissions Control Technology in the Context of Global Climate Change
In this paper, we use the CETA-R model to explore some implications of improved (i.e. lower cost) CO2 control technology. CETA-R represents the costs of global climate change in terms of small risks of large climate change related losses.
First, we treat technology cost as deterministic and explore the implications of improved control technology for the value of information about the risks of large climate change related losses. We find that when future control technology is better, the value of information about climate change risks is substantially lower.
Second, we treat future technology as uncertain and explore the value of information about it, and the economic benefits of research and development that may produce improvements in it. We find that the value of information regarding future technology is relatively low. On the other hand, the direct benefit of better technology is large — each percentage point increase in the chance of twenty percent improved technology has a present value of $8 to $12 billion, depending on the magnitude of the risk of large climate change related losses.
KeywordsFuture Technology Climate Change Risk Optimal Emission Optimal Carbon Synthetic Fuel
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