The Timing of Biological Carbon Sequestration and Carbon Abatement in the Energy Sector Under Optimal Strategies Against Climate Risks

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Abstract
This paper addresses the timing of the use of biological carbon sequestration and its capacity to alleviate the carbon constraint on the energy sector. We constructed a stochastic optimal control model balancing the costs of fossil emission abatement, the opportunity costs of lands allocated to afforestation, and the costs of uncertain climate damages. We show that a minor part of the sequestration potential should start immediately as a “brake”, slowing down both the rate of growth of concentrations and the rate of abatement in the energy sector, thus increasing the option value of the emission trajectories. But, most of the potential is put in reserve to be used as a “safety valve” after the resolution of uncertainty, if a higher and faster decarbonization is required: sequestration cuts off the peaks of costs of fossil abatement and postpones the pivoting of the energy system by up to two decades.