Econonomics of Energy and Environmental Policy

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How a "Low Carbon" Innovation Can Fail--Tales from a "Lost Decade" for Carbon Capture, Transport, and Sequestration (CCTS)

This paper analyzes the discrepancy between the high hopes placed in Carbon Capture, Transport, and Storage (CCTS) and the meager results that have been observed in reality, and advances several explanations for what we call a "lost decade" for CCTS. We trace the origins of the high hopes placed in this technology by industry and policymakers alike, and show how the large number of demonstration projects required for a breakthrough did not follow. We then identify possible explanations for the "lost decade", such as incumbent resistance to structural change, wrong technology choices, over-optimistic cost estimates, a premature focus on energy projects instead of industry, and the underestimation of transport and storage issues. We conclude it is likely that we have to live for quite some time with a cognitive dissonance in which top-down models continue to place hope in the CCTS-technology by reducing its expected fixed and variable costs, and bottom-up researchers continue to count failed pilot projects.
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JEL Codes:O31: Innovation and Invention: Processes and Incentives, P18: Energy; Environment, Q35: Hydrocarbon Resources

Keywords: CCTS, Innovation, Technology policy, Low-carbon energy transformation

DOI: 10.5547/2160-5890.1.2.8

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Published in Volume 1, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.


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