Carbon Dioxide Sequestration: When and How Much?

We analyze carbon dioxide (CO sequestration as a strategy to manage future climate change in an optimal economic growth framework. We approach the problem in two ways: first, by using a simple analytical model, and second, by using a numerical optimization model which allows us to explore the problem in a more realistic setting. CO sequestration is not a perfect substitute for avoiding CO production because CO leaks back to the atmosphere and hence imposes future costs. The “efficiency factor” of CO sequestration can be expressed as the ratio of the avoided emissions to the economically equivalent amount of sequestered CO emissions. A simple analytical model in terms of a net-present value criterion suggests that short-term sequestration methods such as afforestation can be somewhat ( 60 %) efficient, while long term sequestration (such as deep aquifer or deep ocean sequestration) can be very ( 90%) efficient. A numerical study indicates that CO sequestration methods at a cost within the range of present estimates reduce the economically optimal CO concentrations and climate related damages. The potential savings associated with CO sequestration is equivalent in our utilitarian model to a one-time investment of several percent of present gross world product.