Working Paper
SolACE - Solar Geoengineering in an Analytic Climate Economy
Solar geoengineering is an affordable measure to counteract the global temperature increase. We derive a simple policy rule for sulfur-based geoengineering in a state of the art integrated assessment model of climate change. We show how geoengineering affects optimal carbon taxation, deriving the different components of the Pigovian tax. We show how the globally optimal rational for geoengineering and carbon taxation changes in a dynamic Markov game across regions. A quantitative simulation suggests a non-cooperative equilibrium where China as a single mover reduces temperatures to the Paris accord’s most stringent 1.5C target by 2100. It “free-drives” on the margin but all regions apart from Russia free-ride in absolute terms. The
simulated temperature increase peaks around 2165 exceeding the 2C target.
Key Words
- solar geoengineering
- climate change
- dynamic games
- social cost of carbon
- carbon tax
- free-riding
- free-driving
- integrated assessment