Effects of Carbon Dioxide Capture and Storage in Germany on European Electricity Exchange and Welfare

Dirk Rübbelke and Stefan Vögele

No 2012-05, Working Papers from BC3

Abstract: In the course of European efforts to mitigate global warming, the application of carbon dioxide capture and storage (CCS) technologies is discussed as a potential option. Some political opposition was raised – inter alia – by uncertainties about the effective cost of such technologies. Because of the cost structure of CCS power plants with high ‘flat’ investment cost and – in case of high carbon allowance prices – comparable low variable cost, the application of CCS will induce a merit-order effect causing a decline in electricity prices on the spot market. On the one hand, the reduction of electricity supply cost raises suppliers’ rents, while the decline of electricity prices augments consumers’ surpluses. These positive welfare effects tend to mitigate political opposition against CCS. On the other hand, the merit-order effect reduces electricity suppliers’ revenues as the electricity prices decline. This mitigates their scope for additional investments in CCS capacity. In this study, we focus on the influence of CCS in Germany on electricity supplier and consumer surpluses and associated impacts on the scope for investments in additional CCS capacity. By means of the applied model of electricity markets, influences on European electricity exchange and welfare levels are investigated

Keywords: Carbon dioxide capture and storage (CCS); merit-order effect; redistribution of wealth (search for similar items in EconPapers)
Date: 2012-06
New Economics Papers: this item is included in nep-ene, nep-env and nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published

Downloads: (external link)
http://www.bc3research.org/index.php?option=com_wp ... 8&repec=1&Itemid=279 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden (http://www.bc3research.org/index.php?option=com_wpapers&task=downpubli&iddoc=48&repec=1&Itemid=279 [301 Moved Permanently]--> https://www.bc3research.org/index.php?option=com_wpapers&task=downpubli&iddoc=48&repec=1&Itemid=279)

Related works:
Journal Article: Effects of carbon dioxide capture and storage in Germany on European electricity exchange and welfare (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bcc:wpaper:2012-05

Access Statistics for this paper

More papers in Working Papers from BC3
Bibliographic data for series maintained by Sergio Henrique Faria ().