Working Paper: NBER ID: w21589
Authors: Garth Heutel; Juan Moreno Cruz; Soheil Shayegh
Abstract: We study optimal climate policy when climate tipping points and solar geoengineering are present. Solar geoengineering reduces temperatures without reducing greenhouse gas emissions. Climate tipping points are irreversible and uncertain events that cause large damages. We analyze three different rules related to the availability of solar geoengineering: a ban, using solar geoengineering as insurance against the risk of tipping points, or using solar geoengineering only as remediation in the aftermath of a tipping point. We model three distinct types of tipping points: two that alter the climate system and one that yields a direct economic cost. Using an analytic model, we find that an optimal policy, which minimizes expected losses from the tipping point, includes both emissions reductions and solar geoengineering from the onset. Using a numerical simulation model, we quantify optimal policy and various outcomes under the alternative scenarios. The presence of tipping points leads to more mitigation and more solar geoengineering use and lower temperatures.
Keywords: climate policy; solar geoengineering; climate tipping points
JEL Codes: C61; H23; Q54; Q58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Climate tipping points (CTPs) (Q54) | Optimal levels of mitigation and solar geoengineering (SGE) (Q54) |
| Higher risks associated with CTPs (G22) | Increased mitigation efforts and SGE usage (C68) |
| Temperature increases (E31) | Probability of reaching a tipping point (C62) |
| Policy restrictions (R48) | Economic outcomes (F69) |
| Availability of SGE (D58) | Risks associated with crossing tipping points (D81) |
| Remediation rule (SGE after tipping point) (Q52) | Mitigation and carbon concentrations (Q54) |
| SGE implementation (D58) | Reduction of climate risks (Q54) |
| Presence of CTPs (C24) | Aggressive climate policy approach (Q58) |