Grimaud, André <br/><br/>
Carbon Sequestration and Optimal Climate Policy 

 -  2009.<br/>							 
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<br/><br/> We present an endogenous growth model in which the use of a non-renewable natural resource generates carbon-dioxide emissions that can be partly sequestered. This approach breaks with the systematic link between resource use and pollution emission. The accumulated stock of remaining emissions has a negative impact on household utility and corporate productivity. While sequestration quickens the optimal extraction rate, it can also generate higher emissions in the short run. It also has an adverse effect on economic growth. We study the impact of a carbon tax: the level of the tax has an effect in our model, its optimal level is positive, and it can be interpreted ex post as a decreasing ad valorem tax on the resource.