Economic Modeling of the Global Adoption of Carbon Capture and Sequestration Technologies

Abstract

Heightened concerns about global climate change have aroused interest in carbon capture and sequestration technologies as a means of decreasing the growth rate of atmospheric carbon dioxide concentrations. Projects are already underway to research and implement such technologies in countries like the United States, Japan, Norway, and the United Kingdom. In the United States, the Department of Energy (DOE) is investigating the economic, technological, and social issues of carbon capture and sequestration technologies. This chapter summarizes the analysis of two electricity generation technologies with carbon capture and sequestration as well as a generation technology without carbon capture and sequestration. The MIT Emissions Prediction and Policy Analysis (EPPA) model, a computable general equilibrium model of the world economy, has been used to model carbon capture and sequestration (CCS) technologies based on a natural gas combined cycle (NGCC) plant and an integrated coal gasification combined cycle (IGCC) plant. These technologies have been fully specified within the EPPA model for all regions of the world by production functions. The results illustrate how changing input prices and general equilibrium effects influence the global adoption of carbon sequestration technologies and other technologies for electricity production. Rising carbon prices lead first to the adoption of NGCC plants without carbon capture and sequestration, followed by IGCC plants with capture and sequestration as natural gas prices rise.