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Needed: a price for carbon capture

Published online by Cambridge University Press:  28 November 2025

Elisa Belfiori Open the ORCID record for Elisa Belfiori [Opens in a new window]
Elisa Belfiori*
Affiliation:
School of Business, Universidad Torcuato Di Tella, Buenos Aires, Argentina Email: ebelfiori@utdt.edu
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Abstract

This paper presents a macroeconomic framework for carbon markets. We set up a global climate-economy with carbon-intensive energy inputs, renewable energy, natural carbon sinks, and a carbon capture technology to show that (i) within a comprehensive carbon pricing system, a carbon tax alone implements any given path of carbon emissions; (ii) ‘additionality’ is not a property of the optimal carbon pricing system; and (iii) without a carbon tax, renewable subsidies, preservation of carbon sinks and a price for carbon capture are needed.

Keywords

carbon capturecarbon offsetscarbon pricesLatin Americanet emissions

JEL classification

Q54: Climate • Natural Disasters and Their Management • Global Warming Q58: Government Policy H21: Efficiency • Optimal Taxation H23: Externalities • Redistributive Effects • Environmental Taxes and Subsidies

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