Carbon capture and storage and infrastructure innovation in the presence of transboundary pollution: A differential game analysis

This study employs a differential game approach to examine the carbon capture and storage (CCS) and infrastructure innovation strategies of two countries in the context of transboundary pollution. The game model incorporates three key elements: (ⅰ) the quantity of CO$ _{2} $ captured by each country depends on its capital stock of CCS infrastructure; (ⅱ) both countries engage in infrastructure innovation activities; and (ⅲ) an incentive equilibrium mechanism is developed to foster sustained cooperation between the two countries. Our findings reveal that when emission levels remain constant, the system exhibits a steady-state equilibrium with a saddle point in both non-cooperative and cooperative game scenarios. However, when emission levels grow at a constant rate, a balanced growth path emerges, wherein both infrastructure investment and infrastructure capital stock experience the same growth rate. To ensure the sustainability of cooperative outcomes, we introduce an incentive equilibrium that necessitates the achievement of the maximum utility function at the cooperative equilibrium. This research contributes to the understanding of the interplay between CCS deployment, infrastructure innovation, and transboundary pollution. The findings provide valuable insights into the benefits of collaborative investment in CCS infrastructure among nations, enabling policymakers to formulate cooperative strategies and agreements to reduce pollution and enhance CO$ _{2} $ capture. Moreover, the research highlights the advantages of cooperative investment, including reduced pollution and increased CO$ _{2} $ capture, serving as a catalyst for countries to foster collaboration in addressing transboundary CO$ _{2} $ emissions and facilitating more effective solutions.