Optimal Policy to Achieve 2 Degrees Warming

Abstract

We extend the model of Cai and Lontzek (2019) to study the optimal policy chosen by a planner that wants to keep warming under 2 degrees. We consider a carbon tax and a cap and trade scheme. We also add differentiated regions, the global north and south, with separate capital stocks as in Cai, Brock, Xepapadeas and Judd (2018). We are able to solve the model using distributed computing with HTCondor, as opposed to on a supercomputer as in Cai and Lontzek (2019).