Integrated assessment of carbon and sulphur emissions, simulations with the CLIMNEG model

Combustion of fossil fuels causes carbon emissions which contribute to global climate change. But combustion processes are also responsible for sulphur emissions and sulphate aerosols offset part of the global warming problem since they increase locally the albedo of the Earth's atmosphere. However, sulphate aerosols contribute to the regional acidification and acid rain problem. Integrated assessment analysis of climate change should incorporate these interactions between global and local environmental problems in a consistent way. This paper describes in a theoretical framework the trade off between carbon and sulphur emission control. Necessary conditions are derived for optimal investment, carbon and sulphur emission control rates in a Nash equilibrium and are compared to Pareto efficient policies. The theoretical results are illustrated by means of a numerical simulation model.