CO2 Abatement Costs Research Articles

Social cost-benefit analysis of hydrogen mobility in Europe

The deployment of hydrogen technologies in the energy mix and the use of hydrogen fuel cell vehicles (FCV) are expected to significantly reduce European greenhouse emissions. We carry out a social cost-benefit analysis to estimate the period of socio-economic conversion, period for which the replacement of gasoline internal combustion engine vehicles (ICEV) by FCV becomes socio-economically profitable. In this study, we considered a hydrogen production mix of five technologies: natural gas reforming processes with or without carbon capture and storage, electrolysis, biogas processes and on-site production.We estimate two external costs: the abatement cost of CO2 through FCV and the use of non-renewable resources in the manufacture of fuel cells by measuring platinum depletion. We forecast that carbon market could finance approximately 10% of the deployment cost of hydrogen-based transport and that an early economic conversion could be targeted for FCV. Almost ten years could be saved by considering externalities.

An expert-based bayesian assessment of 2030 German new vehicle CO2 emissions and related costs

We formulate and elicit Bayesian Belief Networks (BBNs) for assessing possible characteristics of the 2030 German new passenger car fleet, including market shares of different vehicle types, CO2 emissions, user costs, and CO2 abatement costs for internal combustion engine vehicles including hybrid electric vehicles (ICE); plug-in hybrid electric vehicles (PHEV); and battery electric vehicles (BEV). Seven technology and environmental experts from the German Original Equipment Manufacturers (OEM) sector were elicited for key relationships and conditional probability values in the model, yielding seven distinct BBNs able to predict how different future technology, economic and policy scenarios will influence model projections. The 2030 scenarios include differing amounts of technological advancement in battery development, regulation, and fuel and electricity greenhouse gas intensities. Across the expert models, 2030 baseline fleet greenhouse gas emissions are predicted to be at 50–65% of 2008 new fleet emissions. They can be further reduced to 40–50% of the emissions of the 2008 new fleet through a combination of a higher share of renewables in the electricity mix, a larger share of biofuels in the fuel mix, and a stricter regulation of car CO2 emissions in the European Union. The experts' BBNs predict that the 2030 ICE will have lower user costs per kilometer than PHEV or BEV for most scenarios, and that ICE will remain the dominant vehicle type in the 2030 German new fleet. According to all of the experts' BBNs, CO2 abatement costs are negative for the 2030 ICE in all scenarios, but can be positive or negative for PHEV and BEV, depending on the expert model and scenario assumed. Critical areas where expert models agree and differ serve to highlight where reductions in uncertainty regarding future technology, economic, environmental and regulatory relationships are most needed to improve our ability to predict and anticipate future vehicle fleet composition and vehicle performance.

Potential carbon emission abatement cost recovery from carbon emission trading in China

Purpose This study aims to provide an estimation of carbon dioxide (CO2) emission abatement costs in China’s industry sector during the period of 2006-2010, and additionally provide an ex-post estimation of CO2 abatement cost savings that would be realized if carbon emission permits trading among different industry sectors of 30 provinces in China during the same period were allowed, to answer the question that whether the industrial carbon emission abatement cost can (partially) be recovered from carbon emission trading in China. Design/methodology/approach The joint production framework associated with the environmental technology is utilized for formulating the models for estimating abatement costs and simulating emission permits trading scheme. Several data envelopment analysis-based models that could deal with both the desirable and undesirable outputs within the above framework are utilized for abatement cost saving estimation. The weak disposability assumption and variable returns to scale assumption are applied in the modelling. Findings In China’s industry sector, during 2006-2010, the estimated CO2 emission abatement cost was 1,842 billion yuan, which accounts for 2.45 per cent of China’s total industrial output value; the emission abatement cost saving from emission permits trading would be 315 billion yuan, which accounts for 17.12 per cent of the emission opportunity abatement cost; and additional 1,065.95 million tonnes of CO2 emission reductions would be realized from emission permits trading, and this accounts for 4.75 per cent of the total industrial CO2 emissions. Research limitations/implications The estimation is implemented at the regional level, i.e. the emission permits trading subjects are the whole industry sectors in different Chinese provinces, because of the data limitation in this study. Further estimation could be implemented at the enterprise level to provide a deeper insight into the abatement cost recovery from emission permits trading. Practical implications The estimation models and calculation process introduced in this study could be applied for evaluating the efficiency and effectiveness of pollutant emission permits trading schemes from the perspective that whether these market-based abatement policy instruments help to realize the potential abatement cost savings. Originality/value To the best of the authors’ knowledge, no study has provided the estimation of CO2 emission abatement cost and the estimation of CO2 abatement cost saving effect from emission permits trading for China’s industry sector. This study provides the first attempt to fill this research gap.

Managing the costs of CO2 abatement in the cement industry

This article investigates how the costs associated with deep reductions in CO2 emissions from the cement industry will influence the costs across the entire value chain from cement production to the eventual end-use, in this case a residential building. The work is motivated by the substantial difference between the pricing of CO2 emissions and the costs of mitigation at the production sites of energy-intensive industries, such as cement manufacture. By examining how CO2 trading and investments in low-carbon kiln systems affect costs and prices further up the supply chain of cement our analysis provides new perspectives on the costs of industry abatement of CO2 and on the question of who could or should pay the price of such abatement. The analysis reveals that the cost impacts decrease substantially at each transformation stage, from limestone to final end-uses. The increase in total production costs for the residential building used as the case study in this work is limited to 1%, even in the cases where the cement price is assumed to be almost doubled.Policy relevanceWith the price of emission allowances under the EU Emissions Trading System (EU ETS) currently far below the levels required to unlock investments in low-CO2 production processes in carbon-intensive industry (i.e. petroleum refining, iron and steel production and cement manufacturing), this article seeks to pave the way for a discussion on complementary policy options. The results from this study, using the supply of cement and concrete to a residential building as a case study, suggest that because cement and concrete typically account for a limited proportion of the total cost of most construction and civil engineering projects, a policy scheme designed to allocate more of the costs of CO2 abatement to the end-users (of cement) would neither (significantly) alter the cost structure nor (dramatically) increase overall project costs.

Wind and solar energy: a comparison of costs and environmental impacts

This study is concerned with the analysis of two renewable technologies for electric energy production: wind energy and photovoltaic energy. The two technologies were assessed and compared by economic point of view, by using selected indicators characterized by a clear calculation approach, requirement of information easy to be collected, clear, but even complete, interpretation of results. The used economic indicators are Levelized Cost of Energy, CO2 abatement cost and fossil fuel saving specific cost; these last two specifically aimed at evaluating the different capabilities that renewable technologies have to cut down direct CO2 emissions and to avoid fossil fuel extraction. The two technologies were compared also from the environmental point of view by applying Life Cycle Assessment approach and using the environmental impact categories from the Eco-indicator‟95 method. The economic analysis was developed by taking into account different energy system sizes and different geographic areas in order to compare different European conditions (Italy, Germany and Denmark) in term of renewable resource availability and market trend. The environmental analysis was developed comparing two particular types of PV and wind plants, respectively residential and micro-wind turbine, located in Italy. According to the three calculated economic indicators, the wind energy emerged as more favorable than PV energy. From the environmental point of view, both the technologies are able to provide savings for almost all the considered environmental impact categories. The proposed approach, based on the use of economic and environmental indicators may be useful in supporting the policies and the decision making procedures concerned with the promotion and use of renewables, in reference to the specific geographic, economic and temporal conditions.

Integrated techno-economic and environmental assessments of sixty scenarios for co-firing biomass with coal and natural gas

Displacement of fossil fuel-based power through biomass co-firing could reduce the greenhouse gas (GHG) emissions from fossil fuels. In this study, data-intensive techno-economic models were developed to evaluate different co-firing technologies as well as the configurations of these technologies. The models were developed to study 60 different scenarios involving various biomass feedstocks (wood chips, wheat straw, and forest residues) co-fired either with coal in a 500MW subcritical pulverized coal (PC) plant or with natural gas in a 500MW natural gas combined cycle (NGCC) plant to determine their technical potential and costs, as well as to determine environmental benefits. The results obtained reveal that the fully paid-off coal-fired power plant co-fired with forest residues is the most attractive option, having levelized costs of electricity (LCOE) of $53.12–$54.50/MWh and CO2 abatement costs of $27.41–$31.15/tCO2. When whole forest chips are co-fired with coal in a fully paid-off plant, the LCOE and CO2 abatement costs range from $54.68 to $56.41/MWh and $35.60 to $41.78/tCO2, respectively. The LCOE and CO2 abatement costs for straw range from $54.62 to $57.35/MWh and $35.07 to $38.48/tCO2, respectively.

Integrated assessment of energy efficiency technologies and CO2 abatement cost curves in China’s road passenger car sector

Road transport is one of the main sources of energy consumption and CO2 emissions. It is essential to conserve energy and reduce emissions by promoting energy efficiency technologies (EETs) in this sector. This study first identifies EETs for the passenger cars and then classifies them into various technology bundles. It then analyzes the CO2-reduction potentials and emissions abatement costs of 55 type-path, 246 type-path-technology, and 465 type-path-subtechnology bundles from micro-vehicular and macro-industrial perspectives during 2010–2030, based on which marginal abatement cost (MAC) curve for China’s road passenger car sector is established. Results show that the cumulative CO2-reduction potential of EETs on passenger cars in China during 2010–2030 is about 2698.8Mt, but only 4% is cost-effective. The EETs with low emissions abatement costs are mainly available in the spark ignition (SI), diesel, and hybrid electric vehicle (HEV) paths on the taxis and high-performance cars, and also in the transmission, vehicle body and SI technologies on the private cars, which could be promoted at present. The technologies with large emissions reduction potential are mainly available in the plug-in hybrid electric vehicle (PHEV) and electric vehicle (EV) paths, which would be the main channels for reducing carbon emissions in the long run.

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.

Formula omitted]-abatement cost of residential heat pumps with active demand response: demand- and supply-side effects

Heat pumps are widely recognized as a key technology to reduce CO2 emissions in the residential building sector, especially when the electricity-generation system is to decarbonize by means of large-scale introduction of renewable electric power generation sources. If heat pumps would be installed in large numbers in the future, the question arises whether all building types show equal benefits and thus should be given the same priority for deployment. This paper aims at answering this question by determining the CO2-abatement cost of installing a heat pump instead of a condensing gas boiler for residential space heating and domestic hot-water production. The electricity system, as well as the building types, are based on a possible future Belgian setting in 2030 with high RES penetration at the electricity-generation side. The added value of this work compared to the current scientific literature lies in the integrated approach, taking both the electricity-generation system and a bottom up building stock model into account. Furthermore, this paper analyzes the possible benefits of active demand response in this framework. The results show that the main drivers for determining the CO2-abatement cost are the renovation level of the building and the type of heat pump installed. For thoroughly insulated buildings, an air-coupled heat pump combined with floor heating is the most economic heating system in terms of CO2-abatement cost. Finally, performing active demand response shows clear benefits in reducing costs. Substantial peak shaving can be achieved, making peak capacity at the electricity generation side superfluous, hence lowering the overall CO2-abatement cost.

Cement industry greenhouse gas emissions – management options and abatement cost

Growing anthropogenic greenhouse gas emissions and increasing global demand for cement are general drivers for managing greenhouse gas emissions (GHG) in the cement industry. Overall CO2 dominates cement sector GHG emissions. The aim was to study how the management of GHG emissions in the cement production chain is related to (1) clinker substitutes, (2) primary source of energy, (3) electricity emissions, (4) technology in use and (5) geographic location. Therefore regional CO2 emissions in the cement industry were analyzed by applying a climate impact management matrix on a cradle-to-gate basis. The use of clinker substitutes in cement varied from 3% to 36.4%. The results show that the variation of process technology and thermal energy use related CO2 emissions is more significant than that of electricity emissions. The highest near term potential to avoid emissions is replacing clinker with mineral components (MIC). Increasing the global use of MIC to a level of 34.2%in cement would save 312 Mt CO2 with the 2013 level of annual cement production. Similarly, a 2.7% reduction in thermal energy use would save 28 Mt CO2 annually, and a 10% decrease of emissions from electricity use would save 26 Mt CO2. The best long term options from 2030 onwards are different carbon capture technologies and MgO and geopolymer cements. In addition, the CO2 abatement costs of different investment projects were compared by using a uniform capital recovery factor. The abatement cost of avoided emissions varied from US$4 to US$ 448 per ton of CO2 depending on the technology, geographical location and initial level of CO2 emissions.

The potential of alternative fuel vehicles: A cost-benefit analysis

This study investigates the economic validity of the diffusion of fuel cell vehicles (FCVs) and all-electric vehicles (EVs), employing a cost-benefit analysis from the social point of view. This research assumes the amount of NOx and tank-to-wheel CO2 emissions and gasoline use reduction as the benefits and the purchase costs, infrastructure expenses, and maintenance costs of alternative vehicles as the costs of switching internal combustion engine (ICE) vehicles to alternative energy vehicles. In addition, this study conducts a sensitivity analysis considering cost reductions in FCV and EV production and increasing costs for CO2 abatement as well as increasing gasoline prices. In summary, the results show that the diffusion of FCVs is not economically beneficial until 2110, even if the FCV purchase cost decreases to that of an ICE vehicle. EV diffusion might be beneficial by 2060 depending on increases in gasoline prices and CO2 abatement costs.

Estimating the environmental efficiency and marginal CO2 abatement cost of coal-fired power plants in China

We estimate the environmental efficiency, reduction potential and marginal abatement cost of carbon dioxide (CO2) emissions from coal-fired power plants in China using a novel plant-level dataset derived from the first and second waves of the National Economic Survey, which were implemented in 2004 and 2008, respectively. The results indicate that there are large opportunities for CO2 emissions reduction in China's coal-fired power plants. Given that all power plants operate fully efficiently, China's CO2 emissions in 2004 and 2008 could have been reduced by 52% and 70%, respectively, accompanied by an expansion in electricity output. In other words, the opportunities for ‘double dividend’ exist. In 2004, the average marginal abatement cost of CO2 emissions for China's power plants was approximately 955 Yuan/ton, whereas in 2008, the cost increased to 1142 Yuan/ton. The empirical analyses show that subsidies from the government can reduce environmental inefficiency, but the subsidies significantly increase the shadow price of the power plants. Older and larger power plants have a lower environmental efficiency and marginal CO2 abatement cost. The ratio of coal consumption negatively affects the environmental efficiencies of power plants.

When will wind energy achieve grid parity in China? – Connecting technological learning and climate finance

China has adopted an ambitious plan for wind energy deployment. This paper uses the theory of the learning curve to investigate financing options to support grid parity for wind electricity. First, relying on a panel dataset consisting of information from 1207 wind projects in China’s thirty provinces over the period of 2004–2011, this study empirically estimates the learning rate of onshore wind technology to be around 4.4%. Given this low learning rate, achieving grid parity requires a policy of pricing carbon at 13€/ton CO2e in order to increase the cost of coal-generated electricity. Alternatively, a learning rate of 8.9% would be necessary in the absence of a carbon price. Second, this study assesses the evolution of additional capital subsidies in a dynamic framework of technological learning. The implicit average CO2 abatement cost derived from this learning investment is estimated to be around 16€/ton CO2e over the breakeven time period. The findings suggest that climate finance could be structured in a way to provide up-front financing to support this paradigm shift in energy transition.

Joining the CCS club! The economics of CO2 pipeline projects

This paper examines the conditions for a widespread adoption of Carbon Capture transport and Storage (CCS) by a group of emitters that can be connected to a common CO2 pipeline. It details a modeling framework aimed at assessing the critical value in the charge for the CO2 emissions required for each of the emitters to decide to implement capture capabilities. This model can be used to analyze how the tariff structure imposed on the CO2 pipeline operator modifies the overall cost of CO2 abatement via CCS. This framework is applied to the case of a real European CO2 pipeline project. We find that the obligation to use cross-subsidy-free pipeline tariffs has a minor impact on the minimum CO2 price required to adopt the CCS. In contrast, the obligation to charge non-discriminatory prices can either impede the adoption of CCS or significantly raise that price. Besides which, we compared two alternative regulatory frameworks for CO2 pipelines: a common European organization as opposed to a collection of national regulations. The results indicate that the institutional scope of that regulation has a limited impact on the adoption of CCS compared to the detailed design of the tariff structure imposed on pipeline operators.

Role of feed-in tariff policy in promoting solar photovoltaic investments in Malaysia: A system dynamics approach

Solar photovoltaic has shown a significant rise in terms of worldwide installation. One of the main reason is due to the introduction of the FiT (feed-in tariff) policy by the governments. This paper aims to evaluate FiT policy in promoting solar PV (photovoltaic) investments in Malaysia by using a dynamic systems approach. The assessment model captures the complexities arising from the interaction of FiT rate dynamics, construction delays, and investors’ and technology learning dynamics in an integrated framework. The model provides total operational PV capacity, amount of finances needed to support the policy, and the cost of environmental savings, as output. Computer simulations, based on twelve scenarios, were used as a means to study the model behaviour. For the most favourable scenario, a total capacity of about 16 GW PV by 2050 can be expected, while for the least favourable scenario, expectations would be only about 10 GW. On the expenditure side, the most favourable scenario can cost up to MYR (Malaysia Ringgit) 15 billion, whereas, for the least favourable ones, the cost can be as low as MYR2 billion. The maximum cost of CO2 abatement can vary from MYR 0.05 per kg-CO2 to the lowest value of MYR 0.02 per kg-CO2.

Assessment of the Japanese Energy Efficiency Standards Program

Japanese energy efficiency standards program for appliances is a unique program which sets and revises mandatory standards based on the products of the highest energy efficiency in the market. This study assessed the cost-effectiveness of the standard settings for an air conditioner as a major residential appliance or typical example in the program. Based on analysis of empirical data, the net costs and effects from 1999 to 2040 were estimated. When applying a discount rate of 3%, the cost of abating CO2 emissions realized through the considered standards was estimated to be -13,700 JPY/t CO2. The sensitivity analysis, however, showed that the cost turns into positive at a discount rate of 26% or higher. The authors also revealed that the standards’ “excellent” cost-effectiveness largely depends on that of the 1 st standard setting, and the CO2 abatement cost through the 2 nd standard was estimated to be as high as 26,800 JPY/t CO2. The results imply that the government is required to be careful about the possible economic burden imposed when considering introducing new, additional standards.

Regional differences in China's CO2 abatement cost

Under a framework of output distance function with multiple outputs, the study discusses the carbon abatement cost at provincial and regional levels in China, using the shadow price analysis. The findings show that the abatement cost, reflecting the marginal opportunity cost of carbon reduction, varies greatly among the provinces. On average, the abatement cost of the eastern region was much higher than that of the mid-western region during the observed period. The findings provide evidence that the carbon prices in the current ETS pilots have been much lower than desired levels, implying inefficiency of the markets. The wide range of the abatement cost estimates supports that the equi-marginal principle does not hold for the regulations on carbon pollution at regional levels. The regional cost differences indicate the huge potential for China to minimize the total abatement cost with policy instruments that may motive the emissions moving from areas of low abatement cost to where the abatement cost is higher. For a few undeveloped provinces that are environmentally fragile and have high abatement cost, supplementary measures will be needed to reduce the negative impact of carbon cutbacks on the poor to the minimum.

The differential impact of low-carbon technologies on climate change mitigation cost under a range of socioeconomic and climate policy scenarios

This paper considers the effect of several key parameters of low carbon energy technologies on the cost of abatement. A methodology for determining the minimum level of performance required for a parameter to have a statistically significant impact on CO2 abatement cost is developed and used to evaluate the impact of eight key parameters of low carbon energy supply technologies on the cost of CO2 abatement. The capital cost of nuclear technology is found to have the greatest impact of the parameters studied. The cost of biomass and CCS technologies also have impacts, while their efficiencies have little, if any. Sensitivity analysis of the results with respect to population, GDP, and CO2 emission constraint show that the minimum performance level and impact of nuclear technologies is consistent across the socioeconomic scenarios studied, while the other technology parameters show different performance under higher population, lower GDP scenarios. Solar technology was found to have a small impact, and then only at very low costs. These results indicate that the cost of nuclear is the single most important driver of abatement cost, and that trading efficiency for cost may make biomass and CCS technologies more competitive.

Quantifying CO2 abatement costs in the power sector

CO2 cap-and-trade mechanisms and CO2 emission taxes are becoming increasingly widespread. To assess the impact of a CO2 price, marginal abatement cost curves (MACCs) are a commonly used tool by policy makers, providing a direct graphical link between a CO2 price and the expected abatement. However, such MACCs can suffer from issues related to robustness and granularity. This paper focuses on the relation between a CO2 emission cost and CO2 emission reductions in the power sector. The authors present a new methodology that improves the understanding of the relation between a CO2 cost and CO2 abatement. The methodology is based on the insight that CO2 emissions in the power sector are driven by the composition of the conventional power portfolio, the residual load and the generation costs of the conventional units. The methodology addresses both the robustness issue and the granularity issue related to MACCs. The methodology is based on a bottom-up approach, starting from engineering knowledge of the power sector. It offers policy makers a new tool to assess CO2 abatement options. The methodology is applied to the Central Western European power system and illustrates possible interaction effects between, e.g., fuel switching and renewables deployment.

Biofuel futures in road transport – A modeling analysis for Sweden

First and second generation biofuels are among few low-carbon alternatives for road transport that currently are commercially available or in an early commercialization phase. They are thus potential options for meeting climate targets in the medium term. For the case of Sweden, we investigate cost-efficient use of biofuels in road transport under system-wide CO2 reduction targets to 2050, and the effects of implementation of targets for an almost fossil-free road transport sector to 2030. We apply the bottom-up, optimization MARKAL_Sweden model, which covers the entire Swedish energy system including the transport sector. For CO2 reductions of 80% to 2050 in the Swedish energy system as a whole, the results of the main scenario show an annual growth rate for road transport biofuels of about 6% from 2010 to 2050, with biofuels accounting for 78% of road transport final energy use in 2050. The preferred biofuel choices are methanol and biomethane. When introducing additional fossil fuel phase-out policies in road transport (−80% to 2030), a doubling of the growth rate to 2030 is required and system CO2 abatement costs increases by 6% for the main scenario. Results imply that second generation biofuels, along with energy-efficient vehicle technologies such as plug-in hybrids, can be an important part of optimized system solutions meeting stringent medium-term climate targets.