Policy uncertainty and diffusion of carbon capture and storage in an optimal region

Abstract

Carbon capture and storage (CCS) has the potential to dramatically reduce GHG emissions in energy supply and industry. However, its high costs mean that uncertainty about the stringency of future climate policy may dissuade firms from investing in this technology. This article explores the relationship between firms expectations of government policy and investment in CCS. First, it synthesizes recent cost estimates for CCS applications in electricity generation and oil sands extraction in Canada. Second, it uses these estimates to investigate the potential impact of policy stringency and uncertainty on CCS adoption in Alberta, a Canadian province with near-ideal CCS potential. The results suggest investment in CCS, and by extension other costly abatement actions, will not occur unless governments create a more stringent and durable climate policy environment than currently exists. Policy relevanceThis paper has two novel and linked objectives, the first of significant utility to researchers and energy modellers in particular, the second to climate policy analysts and decision makers. First, it synthesizes publicly available carbon capture and storage literature and develops cost estimates for key applications related to thermal electricity generation and oil sands extraction in Canada. Second, it uses these cost estimates to investigate the potential impact of policy stringency and uncertainty on carbon capture and storage adoption in Alberta, Canada. Alberta is a test case for CCS due to its fossil resources and high CO 2 storage potential, and the technology's success or failure in this jurisdiction should be of interest to policy makers elsewhere.

A review of technology and policy deep decarbonization pathway options for making energy-intensive industry production consistent with the Paris Agreement

“…hydrogen based steel making) using R&D and pilot plants as first steps? If the existing process is kept then there is choice between using carbon capture and utilization and storage (Bataille et al, 2015;Leeson et al, 2017) with combusted coal, fossil methane, chemical looping, biomass, or solid oxide fossil methane fuel cells (McMillan et al, 2016), or to use an alternative GHG free heat source, for which development must again be done. For the latter, we describe three temperature classes (0-250°C for general steam and food processing needs, 250-1000°C for general purposes (e.g.…”

“…Carbon capture and utilization or storage (CCUS) is a technically viable option for most large combustion industrial facilities to keep their existing production processes (Bataille et al, 2015; International Energy Agency (IEA), 2014; Leeson et al, 2017), but could be very expensive due to a smaller flue gas volume than electricity generation plants and the need to transport the CO 2 to a disposal site. Work is underway to reduce the cost of capturing CO 2 from the flue gas stream, the most expensive part of CCUS, e.g.…”