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Economic Assessment of the Development of CO2 Direct Reduction Technologies in Long-Term Climate Strategies of the Gulf Countries

Author

Listed:
  • Frédéric Babonneau

    (ORDECSYS / EPFL - ORDECSYS / EPFL, Santiago - University Adolfo Ibanez, UNIGE - Université de Genève = University of Geneva)

  • Ahmed Badran

    (Qatar University)

  • Maroua Benlahrech

    (Qatar University)

  • Alain Haurie

    (ORDECSYS / EPFL - ORDECSYS / EPFL, GERAD - Groupe d’études et de recherche en analyse des décisions - EPM - École Polytechnique de Montréal - McGill University = Université McGill [Montréal, Canada] - HEC Montréal - HEC Montréal - UQAM - Université du Québec à Montréal = University of Québec in Montréal)

  • Maxime Schenckery

    (IFPEN - IFP Energies nouvelles, IFP School)

  • Marc Vielle

    (EPFL - Ecole Polytechnique Fédérale de Lausanne)

Abstract
This paper proposes an assessment of long-term climate strategies for oil- and gas-producing countries—in particular, the Gulf Cooperation Council (GCC) member states—as regards the Paris Agreement goal of limiting the increase of surface air temperature to 2°C by the end of the twenty-first century. The study evaluates the possible role of carbon dioxide removal (CDR) technologies under an international emissions trading market as a way to mitigate welfare losses. To model the strategic context, one assumes that a global cumulative emissions budget will have been allocated among different coalitions of countries—the GCC being one of them—and the existence of an international emissions trading market. A meta-game model is proposed in which deployment of CDR technologies as well as supply of emission rights are strategic variables and the payoffs are obtained from simulations of a general equilibrium model. The results of the simulations indicate that oil and gas producing countries and especially the GCC countries face a significant welfare loss risk, due to "unburnable oil" if a worldwide climate regime as recommended by the Paris Agreement is put in place. The development of CDR technologies, in particular direct air capture (DAC) alleviates somewhat this risk and offers these countries a new opportunity for exploiting their gas reserves and the carbon storage capacity offered by depleted oil and gas reservoirs.

Suggested Citation

  • Frédéric Babonneau & Ahmed Badran & Maroua Benlahrech & Alain Haurie & Maxime Schenckery & Marc Vielle, 2021. "Economic Assessment of the Development of CO2 Direct Reduction Technologies in Long-Term Climate Strategies of the Gulf Countries," Post-Print hal-03260579, HAL.
    • Handle: RePEc:hal:journl:hal-03260579
    DOI: 10.1007/s10584-021-03058-4
    Note: View the original document on HAL open archive server: https://ifp.hal.science/hal-03260579
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    References listed on IDEAS

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    Cited by:

    1. Frédéric Babonneau & Javiera Barrera & Javiera Toledo, 2021. "Decarbonizing the Chilean Electric Power System: A Prospective Analysis of Alternative Carbon Emissions Policies," Energies, MDPI, vol. 14(16), pages 1-16, August.
    2. Babonneau, Frédéric & Benlahrech, Maroua & Haurie, Alain, 2022. "Transition to zero-net emissions for Qatar: A policy based on Hydrogen and CO2 capture & storage development," Energy Policy, Elsevier, vol. 170(C).

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    Keywords

    GCC countries; Climate negotiations; Carbon dioxide removal; Financial compensation; Negative emissions; CDR technologies;
    All these keywords.

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