In the session Policy, economics and upscaling (day 1, 15h), I will be presenting an economic model on the optimal policies for nature-based vs technological CDR.
In this paper, we develop a model to determine when and how much nature‑based CDR (afforestation/reforestation) and technological CDR (DACCS) should be deployed alongside emissions reductions in an EU‑type economy subject to a carbon budget. We also identify the carbon prices and CDR subsidies needed to support such a pathway.
Our results show that nature‑based CDR plays a useful role in the medium term by offsetting hard‑to‑abate emissions and reducing reliance on costly technological CDR. Over time, however, forests increasingly only compensate for their own carbon losses from disturbances (e.g. wildfires), rather than offsetting fossil‑fuel emissions. In the EU, limited land availability further constrains the expansion of forest‑based removals. As a result, technological CDR becomes indispensable in the long run to permanently offset residual fossil emissions. Finally, the model highlights a risk of mitigation deterrence: relying too heavily on future technological CDR can weaken incentives for near‑term emissions reductions, despite the high costs and uncertain development of these technologies.
Author: Barbara Saget, Katheline Schubert
University : Paris School of Economics
What I hope to learn at the event:
I am particularly interested in understanding why technologies like DACCS still struggle to scale, and how policymakers can make decisions under such deep technological uncertainty. Betting heavily on these solutions carries risks: overestimating future cost reductions may weaken near‑term emissions‑reduction efforts, which is problematic if the technology remains immature.
More specifically, I would like to understand :
- why commercialization remains limited
- why costs remain so high
- which policy instruments are most effective for accelerating learning‑by‑doing and supporting R&D improvements
- how uncertainty should be accounted for when designing these policies and planning the net‑zero transition