Title:

Tipping, Peak Temperature and Weighing Cows, Geoengineering and Coal.

Abstract:

This paper describes an integrated assessment model with an unknown temperature threshold where severe and irreversible climate impacts, called a tipping point, occurs. The possibility of tipping leads to the following linked outcomes: a prolonged period of peak temperature; a rebound in emissions prior to and during peak temperature; and a fall in the optimal carbon tax as a ratio of output prior to and during peak temperature. Although tipping can occur in any period where temperature rises to a new maximum, the optimal carbon price can be calculated from future temperature outcomes conditional on no tipping. Learning that tipping has not occurred lowers the tax. Optimal prices for short-lived mitigation actions such as methane abatement and geoengineering are compared with long-lived carbon mitigation. In both cost-benefit and cost-minimisation approaches, the ratio of prices of short-lived actions to carbon prices converge to the same value by the end of the peak temperature stabilisation period. Numerical results suggest: the optimal weight for methane is close to the current United Nations policy of a 100-year Global Warming Potential, and the 100-year time frame should decrease to align with the expected end of peak temperature. The use of geoengineering can lower the initial carbon tax and extend the life of the tax.