Based on an optimal investment choice model, we describe the optimal transitions to carbon neutrality that are in line with climate-related constraints such as one-off greenhouse gas emission caps or a cap on cumulative emissions. We show that i) the early scrapping of brown capital – greenhouse gas emitters – cannot occur with one-off targets; ii) in order to limit global warming to a given level, the explicit introduction of such a constraint in the form of a cumulative emissions total not to be exceeded minimizes the associated economic cost, resulting in an initially high level of scrapping with limited cumulative emissions. Well-chosen regular emissions caps from the first year result in a similar trajectory; iii) with a given cumulative emis­sions constraint, delaying the transition increases both costs and scrapping; iv) the total annual investment during and after the transition is lower than that of the initial state.

Abbas, R., Carnot, N., Lequien, M., Quartier-la-Tente, A. & Roux, S. (2024). On the Way to Net Zero. But Which Way? Economie et Statistique / Economics and Statistics, 544, 3–26.
doi: 10.24187/ecostat.2024.544.2121