CO2 Highways for Europe: Modelling a Carbon Capture, Transport and Storage Infrastructure for Europe. CEPS Working Document No. 340/November 2010

This paper presents a mixed integer, multi-period, cost-minimising model for a carbon capture, transport and storage (CCTS) network in Europe. The model incorporates endogenous decisions about carbon capture, pipeline and storage investments. The capture, flow and injection quantities are based on given costs, certificate prices, storage capacities and point source emissions. The results indicate that CCTS can theoretically contribute to the decarbonisation of Europe’s energy and industrial sectors. This requires a CO2 certificate price rising to €55 per tCO2 in 2050, and sufficient CO2 storage capacity available for both on- and offshore sites. Yet CCTS deployment is highest in CO2-intensive industries where emissions cannot be avoided by fuel switching or alternative production processes. In all scenarios, the importance of the industrial sector as a first-mover to induce the deployment of CCTS is highlighted. By contrast, a decrease in available storage capacity or a more moderate increase in CO2 prices will significantly reduce the role of CCTS as a CO2 mitigation technology, especially in the energy sector. Furthermore, continued public resistance to onshore CO2 storage can only be overcome by constructing expensive offshore storage. Under this restriction, reaching the same levels of CCTS penetration would require a doubling of CO2 certificate prices

Leaving coal unburned: Options for demand-side and supply-side policies

Climate policy consistent with the 2°C target needs to install mechanisms that leave most current coal reserves unburned. Demand-side policies have been argued to be prone to adverse carbon leakage and "green paradox" effects. A growing strain of literature argues in favor of supply-side policies in order to curb future coal consumption. Various concepts with analogies in other sectors are currently discussed. Future empirical research on both demand- and supply-side policy is vital to be able to design efficient and effective policy instruments for climate change mitigation

Nuclear power and the uranium market: Are reserves and resources sufficient?

The increase of the use of atomic power in some emerging economies, in particular South Korea and China, has revitalized a discussion regarding the availability of uranium resources. Despite the fact that global uranium resources are more than sufficient to supply reactor-related demand for the rest of the century, some voices in the nuclear community expect a supply shortage for the upcoming decades, and the risk of prices tippling in the next 20 years. They argue with delayed construction times, untimely mining expansion and unfavorable market conditions. This Roundup takes a closer look at the arguments of the debate

CO2 Highways for Europe: Modeling a Carbon Capture, Transport and Storage Infrastructure for Europe

We present a mixed integer, multi-period, cost-minimizing carbon capture, transport and storage (CCTS) network model for Europe. The model incorporates endogenous decisions about carbon capture, pipeline and storage investments; capture, flow and injection quantities based on given costs, certificate prices, storage capacities and point source emissions.The results indicate that CCTS can theoretically contribute to the decarbonization of Europe's energy and industry sectors. This requires a CO2 certificate price rising to 55 EUR in 2050, and sufficient CO2 storage capacity available for both on and offshore sites. However, CCTS deployment is highest in CO2-intensive industries where emissions cannot be avoided byfuel switching or alternative production processes. In all scenarios, the importance of the industrial sector as a first mover to induce the deployment of CCTS is highlighted. By contrast, a decrease of available storage capacity or a more moderate increase in CO2 prices will significantly reduce the role of CCTS as a CO2 mitigation technology, especially in the energy sector. Continued public resistance to onshore CO2 storage can only be overcome by constructing expensive offshore storage. Under this restriction, to reach the same levels of CCTS penetration will require doubling of CO2 certificate prices.carbon capture and storage, pipeline, infrastructure, optimization

The impact of policy measures on future power generation portfolio and infrastructure: A combined electricity and CCTS investment and dispatch model (ELCO)

This paper presents a general electricity-CO2 (ELCO) modeling framework that is able to simulate interactions of the energy-only market with different forms for national policy measures. We set up a two sector model where players can invest into various types of generation technologies including renewables, nuclear and Carbon Capture, Transport, and Storage (CCTS). For a detailed representation of CCTS we also include industry players (iron and steel as well as cement), and CO2 transport and CO2 storage including the option for CO2 enhanced oil recovery (CO2-EOR). The players maximize their expected profits based on variable, fixed and investment costs as well as the price of electricity, CO2 abatement cost and other incentives, subject to technical and environmental constraints. Demand is inelastic and represented via a selection of type hours. The model framework allows for regional disaggregation and features simplified electricity and CO2 pipeline networks. The model is balanced via a market clearing for the electricity as well as CO2 market. The equilibrium solution is subject to constraints on CO2 emissions and renewable generation share. We apply the model to a case study of the UK Electricity Market Reform to illustrate the mechanisms and potential results attained from the model

Market Power Rents and Climate Change Mitigation: A Rationale for Coal Export Taxes?

In this paper we investigate the introduction of an export tax on steam coal levied by an individual country (Australia), or a group of major exporting countries. The policy motivation would be twofold: generating tax revenues against the background of improved terms-of-trade, while CO2 emissions are reduced. We construct and numerically apply a two-level game consisting of an optimal policy problem at the upper level, and an equilibrium model of the international steam coal market (based on COALMOD-World) at the lower level. We find that a unilaterally introduced Australian export tax on steam coal has little impact on global emissions and may be welfare reducing. On the contrary, a tax jointly levied by a "climate coalition" of major coal exporters may well leave these better of while signifcantly reducing global CO2 emissions from steam coal by up to 200 Mt CO2e per year. Comparable production-based tax scenarios consistently yield higher tax revenues but may be hard to implement against the opposition of disproportionally afected local stakeholders depending on low domestic coal prices

A spatial electricity market model for the power system of Kazakhstan

Kazakhstan envisions a transition towards a green economy in the next decades which poses an immense challenge as the country heavily depends on (hydro-)carbon resources, for both its economy and its energy system. In this context, there is a lack of comprehensive and transparent planning tools to assess possible sustainable development pathways in regard to their technical, economic, and environmental implications. We present such a tool with a comprehensive techno-economic model of the Kazakh electricity system which determines the hourly least-cost generation dispatch based on publicly available data on the technical and economic characteristics of power plants and the transmission infrastructure. This modeling framework accounts for the particularities of the Kazakh electricity system: i) it has a detailed representation of combined heat and power, and ii) line losses are endogenously determined using a linear approximation. Model results are examined for a typical winter week (with annual peak load) and a typical summer week (with the hour of lowest annual load) presenting regionally and temporally disaggregated results for power generation, line utilization, and nodal prices. In an application to market design, the paper compares nodal and zonal pricing as two possible pricing schemes in Kazakhstan for the envisioned strengthening of the day-ahead market. In general, the model can be readily used to analyze the least-cost dispatch of the current Kazakh electricity system and can be easily expanded to assess the sector's development. Among others, possible applications include investment in transmission lines and in the aging power plant fleet, scenarios and policy assessment for emission reduction, and questions of market liberalization and market design