Abstract

http://ssrn.com/abstract=1936046
 


 



Determinants of the Costs of Carbon Capture and Sequestration for Expanding Electricity Generation Capacity


Emily Giovanni


Indiana University, School of Public and Environmental Affairs

Kenneth R. Richards


Indiana University Bloomington - School of Public & Environmental Affairs (SPEA); University of Oxford - Oxford Martin School

May 18, 2009

Indiana University, Bloomington: School of Public & Environmental Affairs Research Paper No. 2009-05-02

Abstract:     
The carbon capture and sequestration (CCS) literature to date lacks a comprehensive economic analysis. Our study addresses this need. It models the costs of the entire process, from generation at the power plant to carbon injection at the reservoir, examining the economic factors that affect technology choice and CCS costs. We consider three major fossil fuel generating technologies, each with and without CCS. Our results suggest that natural gas and coal prices have profound impacts on the carbon price needed to induce CCS. Previous cost modeling approaches do not capture this complexity. Therefore, we developed a cost region graph that models technology choice as a function of carbon and fuel prices. Generally, the least‐cost technology at low carbon prices is pulverized coal, while intermediate carbon prices favor natural gas technologies and high carbon prices favor coal gasification with capture. However, the specific carbon prices at which these transitions occur is largely determined by the price of natural gas. For instance, the CCS-justifying carbon price ranges from $100/t C at high natural gas prices to $200/t C at low natural gas prices. This result has important implications for potential climate change legislation. Additionally, our analysis informs the relative importance of other variables. Capital costs are highly important, as reflected by the impact of the Energy Policy Act of 2005, which substantially lowers the justifying carbon price and favors coal technologies. Pipeline distance and reservoir type have smaller impacts overall, but highlight the heterogeneity of costs across industry.

Number of Pages in PDF File: 30

Keywords: carbon capture and sequestration, carbon capture and storage

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Date posted: October 1, 2011  

Suggested Citation

Giovanni, Emily and Richards, Kenneth R., Determinants of the Costs of Carbon Capture and Sequestration for Expanding Electricity Generation Capacity (May 18, 2009). Indiana University, Bloomington: School of Public & Environmental Affairs Research Paper No. 2009-05-02. Available at SSRN: http://ssrn.com/abstract=1936046 or http://dx.doi.org/10.2139/ssrn.1936046

Contact Information

Emily Giovanni (Contact Author)
Indiana University, School of Public and Environmental Affairs ( email )
1315 East Tenth Street
Bloomington, IN 47405
United States
Kenneth R. Richards
Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )
1315 East Tenth Street
Bloomington, IN 47405
United States

University of Oxford - Oxford Martin School
United Kingdom
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