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An Oligopoly Game of CDR Strategy Deployment in a Steady-State Net-Zero Emission Climate Regime

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Abstract

In this paper, we propose a simple oligopoly game model to represent the interactions between coalitions of countries in deploying carbon dioxide removal (CDR) strategies in a steady-state net-zero emission climate regime that could take place by the end of the twenty-first century. The emission quotas and CDR activities obtained in the solution of this steady-state model could then be used as a target for end-of-period conditions in a dynamic integrated assessment analysis studying the transition to 2100. More precisely, we analyze a steady-state situation where m coalitions exist and behave as m players in a game of supplying emission rights on an international emission trading system. The quotas supplied by a coalition must correspond to the amount of CO2 captured through CDR activities in the corresponding world region. We use an extension of the computable general equilibrium model GEMINI-E3 to calibrate the payoff functions and compute an equilibrium solution in the noncooperative game.

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Notes

  1. Actually, several world regions (for instance Canada, or the European Union through its European Green Deal) are aiming to reach carbon neutrality as early as 2050.

  2. See the APS report [48].

  3. We distinguish Qatar and other Gulf Cooperation Council (GCC) countries, as this study is part of a research project supported by the Qatar National Research Fund.

  4. Male and female population aged from 20 to 64.

  5. Emissions from energy combustion.

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Acknowledgments

We thank several researchers who kindly provided additional data from their original papers. This help is much appreciated; in particular, we thank Alice Favero who provided the marginal costs of forest mitigation published in [18] and Adriana Marcucci who gave the CO2 sequestered by DACCS in [32].

The sole responsibility for the content of this paper lies with the authors; the paper does not necessarily reflect the opinions of the European Commission.

Funding

Research supported by QNRF grant NPRP10-0212-17044 on Modeling and Assessing the Transition to Low Carbon/Smart Economy in Gulf Countries (M. Vielle, A. Haurie, and F. Babonneau), the Natural Sciences and Engineering Research Council of Canada under Discovery Grant RGPIN-2016-04214 (O. Bahn), and by the H2020 European Commission Project “PARIS REINFORCE” under grant agreement No. 820846 (M. Vielle). The first author also received support provided by FONDECYT 1190325 and by ANILLO ACT192094, Chile.

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Authors and Affiliations

  1. ORDECSYS, Chêne-Bougeries, Switzerland

    Frédéric Babonneau & Alain Haurie

  2. Escuela de Negocios, Universidad Adolfo Ibañez, Santiago, Chile

    Frédéric Babonneau

  3. GERAD and Department of Decision Sciences, HEC Montréal, Montreal, Canada

    Olivier Bahn & Alain Haurie

  4. University of Geneva, Geneva, Switzerland

    Alain Haurie

  5. LEURE, École Polytechnique Fédérale de Lausanne, Lausanne, Switzerland

    Marc Vielle

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  1. Frédéric Babonneau
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Correspondence to Olivier Bahn.

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Babonneau, F., Bahn, O., Haurie, A. et al. An Oligopoly Game of CDR Strategy Deployment in a Steady-State Net-Zero Emission Climate Regime. Environ Model Assess 26, 969–984 (2021). https://doi.org/10.1007/s10666-020-09734-6

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