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Evaluating Carbon Capture and Storage in a Climate Model with Directed Technical Change

Author

Listed:
  • Durmaz, Tunç

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Schroyen, Fred

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

Abstract
Carbon capture and storage (CCS) is considered a critical technology needed to curb CO2 emissions and is envisioned by the International Energy Agency (IEA) as an integral part of least-cost greenhouse gas mitigation policy. In this paper, we assess the extent to which CCS and R&D in CCS technology are indeed part of a socially efficient solution to the problem of climate change. For this purpose, we extend the intertemporal model of climate and directed technical change developed by Acemoglu et al. (2012, American Economic Review, 102(1): 131{66) to include a sector responsible for CCS. Surprisingly, even for an optimistic cost estimate available for CCS ($60/ton of CO2 avoided), we find that it is not optimal to deploy CCS or devote resources to R&D in CCS technology either in the near or distant future. Indeed, it is only when the marginal cost of CCS is less than $12/ton that a scenario with an active CCS sector (including R&D) becomes optimal, though not in the near future.

Suggested Citation

  • Durmaz, Tunç & Schroyen, Fred, 2013. "Evaluating Carbon Capture and Storage in a Climate Model with Directed Technical Change," Discussion Paper Series in Economics 14/2013, Norwegian School of Economics, Department of Economics.
    • Handle: RePEc:hhs:nhheco:2013_014
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    References listed on IDEAS

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    Cited by:

    1. Durmaz, Tunç, 2018. "The economics of CCS: Why have CCS technologies not had an international breakthrough?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 95(C), pages 328-340.
    2. Amigues, Jean-Pierre & Lafforgue, Gilles & Moreaux, Michel, 2014. "Optimal Timing of CCS Policies under Decreasing Returns to Scale," TSE Working Papers 14-529, Toulouse School of Economics (TSE).
    3. Wiskich, Anthony, 2021. "A comment on innovation with multiple equilibria and "The environment and directed technical change"," Energy Economics, Elsevier, vol. 94(C).

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    More about this item

    Keywords

    Carbon capture and storage CCS; climate.;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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