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Carbon Capture and Storage Technologies in the European Power Market

Abstract:
We examine the potential of Carbon Capture and Storage (CCS) technologies in the European electricity markets, assessing whether CCS technologies will reduce carbon emissions substantially in the absence of investment subsidies, and how the availability of CCS technologies may affect electricity prices and the amount of renewable electricity. To this end we augment a multi-market equilibrium model of the European energy markets with CCS electricity technologies. The CCS technologies are characterized by costs and technical efficiencies synthesized from a number of recent CCS reviews. Our simulations indicate that with realistic values for carbon prices, new CCS coal power plants become profitable, totally replacing non-CCS coal power investments and to a large extent replacing new wind power. New CCS gas power also becomes profitable, but does not replace non-CCS gas power investment fully. Substantially lower costs, through subsidies on technological development or deployment, would be necessary to make CCS modification of existing coal and gas power plants profitable for private investors. doi: 10.5547/ISSN0195-6574-EJ-Vol32-No3-8

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Energy Specializations: Electricity – R&D and Emerging Technologies; Electricity – Policy and Regulation; Energy and the Environment – Climate Change and Greenhouse Gases; Energy and the Environment – Policy and Regulation

JEL Codes:
O32 - Management of Technological Innovation and R&D
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
Q54 - Climate; Natural Disasters and Their Management; Global Warming

Keywords: Carbon capture and storage, fossil fuels, energy, carbon emissions, abatement.

DOI: 10.5547/ISSN0195-6574-EJ-Vol32-No3-8


Published in Volume 32, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.