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Options and Instruments for a Deep Cut in CO2 Emissions: Carbon Dioxide Capture or Renewables, Taxes or Subsidies?

Reyer Gerlagh and Bob van der Zwaan

Year: 2006
Volume: Volume 27
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol27-No3-3
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Abstract:
This paper compares both the main physical options and the principal policy instruments to realize a deep cut in carbon dioxide emissions necessary to control global climate change. A top-down energy-economy model is used that has three emission reduction options: energy savings, a transition towards less carbon-intensive or non-carbon energy resources, and the use of carbon dioxide capture and storage technology. Five policy instruments - carbon taxes, fossil fuel taxes, non-carbon (renewable) energy subsidies, a portfolio standard for the carbon intensity of energy production, and a portfolio standard for the use of non-carbon (renewable) energy resources - are compared in terms of costs, efficiency and their impact on the composition of the energy supply system. One of our main conclusions is that a carbon intensity portfolio standard, involving the recycling of carbon taxes to support renewables deployment, is the most cost-efficient way to address the problem of global climate change. A comprehensive introduction of the capture and storage of carbon dioxide would contribute to reducing the costs of climate change control, but would not obviate the large-scale need for renewables.



A Least-Cost optimisation Model of Co2 Capture Applied to Major uK Power Plants Within The Eu-ETS Framework

A.G. Kemp and A.S. Kasim

Year: 2008
Volume: Volume 29
Number: Special Issue
DOI: 10.5547/ISSN0195-6574-EJ-Vol29-NoSI-7
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Abstract:
Concerns about the cost of CO2 capture and sequestration, and the effective�ness of carbon abatement policies loom large in discussions on climate change mitiga�tion. Several writers address the issue from various perspectives. This paper attempts to add relative realism to discussions on CO2 capture costs, and, the deployment of carbon capture technology in the UK by using publicly available company data on the long term capacity expansion and CO2 capture investment programmes of selected power plants in the UK. With an estimated �8 billion plan to install a generation ca�pacity of 11 GW and capture capability of 44 MtCO2/year, it is imperative to optimise this huge potential investment. A least-cost optimisation model was formulated and solved with the LP algorithm available in GAMS. The model was then applied to ad�dress a number of issues, including the choice of an optimal carbon abatement policy within the EU-ETS framework. The major findings of the study include (a) the long term total cost curve of CO2 capture has three phases � rising, plateau, rising; (b) alternative capture technologies do not have permanent relative cost advantages or disadvantages; (c) Government incentives encourage carbon capture and the avoid�ance of emission penalty charges; and (d) the goals of EU-ETS are more effectively realised with deeper cuts in the EUA ratios than merely hiking the emission penalty, as proposed in EU-ETS Phase II.





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