IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v75y2014icp327-340.html
   My bibliography  Save this article

Carbon prices and CCS investment: A comparative study between the European Union and China

Author

Listed:
  • Renner, Marie

Abstract

Carbon Capture and Storage is considered as a key option for climate change mitigation; policy makers and investors need to know when CCS becomes economically attractive. Integrating CCS in a power plant adds significant costs which can be offset by a sufficient CO2 price. However, most markets have failed: currently, the weak carbon price threatens CCS deployment in the European Union (EU). In China, a carbon regulation is appearing and CCS encounters a rising interest. This study investigates two questions: how much is the extra-cost of a CCS plant in the EU in comparison with China? Second, what is the CO2 price beyond which CCS plants become more profitable than reference plants in the EU and in China? To address these issues, I conducted a literature review on public studies about CCS costs. To objectively assess the profitability of CCS plants, I constructed a net present value model to calculate the Levelised Cost of Electricity and the breakeven CO2 price. CCS plants become the most profitable plant type beyond 115€/tCO2 in the EU vs. 45€/tCO2 in China (offshore transport and storage costs). I advise on the optimal plant type choice depending on the CO2 price in both countries.

Suggested Citation

  • Renner, Marie, 2014. "Carbon prices and CCS investment: A comparative study between the European Union and China," Energy Policy, Elsevier, vol. 75(C), pages 327-340.
    • Handle: RePEc:eee:enepol:v:75:y:2014:i:c:p:327-340
    DOI: 10.1016/j.enpol.2014.09.026
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421514005448
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2014.09.026?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jouvet, Pierre-André & Solier, Boris, 2013. "An overview of CO2 cost pass-through to electricity prices in Europe," Energy Policy, Elsevier, vol. 61(C), pages 1370-1376.
    2. Giovanni, Emily & Richards, Kenneth R., 2010. "Determinants of the costs of carbon capture and sequestration for expanding electricity generation capacity," Energy Policy, Elsevier, vol. 38(10), pages 6026-6035, October.
    3. repec:dau:papers:123456789/7761 is not listed on IDEAS
    4. M. C. Grimston & V. Karakoussis & R. Fouquet & R. van der Vorst & P. Pearson & M. Leach, 2001. "The European and global potential of carbon dioxide sequestration in tackling climate change," Climate Policy, Taylor & Francis Journals, vol. 1(2), pages 155-171, June.
    5. Rubin, Edward S. & Yeh, Sonia & Antes, Matt & Berkenpas, Michael & Davison, John, 2007. "Use of experience curves to estimate the future cost of power plants with CO2 capture," Institute of Transportation Studies, Working Paper Series qt46x6h0n0, Institute of Transportation Studies, UC Davis.
    6. Lenny Bernstein & Arthur Lee & Steven Crookshank, 2006. "Carbon dioxide capture and storage: a status report," Climate Policy, Taylor & Francis Journals, vol. 6(2), pages 241-246, March.
    7. Wu, Ning & Parsons, John E. & Polenske, Karen R., 2013. "The impact of future carbon prices on CCS investment for power generation in China," Energy Policy, Elsevier, vol. 54(C), pages 160-172.
    8. Matthias Finkenrath, 2011. "Cost and Performance of Carbon Dioxide Capture from Power Generation," IEA Energy Papers 2011/5, OECD Publishing.
    9. Rubin, Edward S. & Chen, Chao & Rao, Anand B., 2007. "Cost and performance of fossil fuel power plants with CO2 capture and storage," Energy Policy, Elsevier, vol. 35(9), pages 4444-4454, September.
    10. Blyth, William & Bradley, Richard & Bunn, Derek & Clarke, Charlie & Wilson, Tom & Yang, Ming, 2007. "Investment risks under uncertain climate change policy," Energy Policy, Elsevier, vol. 35(11), pages 5766-5773, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yang, Lin & Xu, Mao & Fan, Jingli & Liang, Xi & Zhang, Xian & Lv, Haodong & Wang, Dong, 2021. "Financing coal-fired power plant to demonstrate CCS (carbon capture and storage) through an innovative policy incentive in China," Energy Policy, Elsevier, vol. 158(C).
    2. Abdul Manaf, Norhuda & Qadir, Abdul & Abbas, Ali, 2016. "Temporal multiscalar decision support framework for flexible operation of carbon capture plants targeting low-carbon management of power plant emissions," Applied Energy, Elsevier, vol. 169(C), pages 912-926.
    3. Fan, Jing-Li & Xu, Mao & Yang, Lin & Zhang, Xian & Li, Fengyu, 2019. "How can carbon capture utilization and storage be incentivized in China? A perspective based on the 45Q tax credit provisions," Energy Policy, Elsevier, vol. 132(C), pages 1229-1240.
    4. Hanak, Dawid P. & Manovic, Vasilije, 2016. "Calcium looping with supercritical CO2 cycle for decarbonisation of coal-fired power plant," Energy, Elsevier, vol. 102(C), pages 343-353.
    5. Muratori, Matteo & Ledna, Catherine & McJeon, Haewon & Kyle, Page & Patel, Pralit & Kim, Son H. & Wise, Marshall & Kheshgi, Haroon S. & Clarke, Leon E. & Edmonds, Jae, 2017. "Cost of power or power of cost: A U.S. modeling perspective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 861-874.
    6. Bo Sun & Jiajia Tao, 2024. "Investment Decisions of CCUS Projects in China Considering the Supply–Demand Relationship of CO 2 from the Industry Symbiosis Perspective," Sustainability, MDPI, vol. 16(12), pages 1-25, June.
    7. Jiongwen Chen & Jinsuo Zhang, 2022. "Effect Mechanism Research of Carbon Price Drivers in China—A Case Study of Shenzhen," IJERPH, MDPI, vol. 19(17), pages 1-17, August.
    8. Fan, Jing-Li & Xu, Mao & Yang, Lin & Zhang, Xian, 2019. "Benefit evaluation of investment in CCS retrofitting of coal-fired power plants and PV power plants in China based on real options," Renewable and Sustainable Energy Reviews, Elsevier, vol. 115(C).
    9. Michalski, Sebastian & Hanak, Dawid P. & Manovic, Vasilije, 2020. "Advanced power cycles for coal-fired power plants based on calcium looping combustion: A techno-economic feasibility assessment," Applied Energy, Elsevier, vol. 269(C).
    10. Paes, Carlos Eduardo & Gandelman, Dan Abensur & Firmo, Heloisa Teixeira & Bahiense, Laura, 2022. "The power generation expansion planning in Brazil: Considering the impact of greenhouse gas emissions in an Investment Decision Model," Renewable Energy, Elsevier, vol. 184(C), pages 225-238.
    11. Fang, Guochang & Tian, Lixin & Liu, Menghe & Fu, Min & Sun, Mei, 2018. "How to optimize the development of carbon trading in China—Enlightenment from evolution rules of the EU carbon price," Applied Energy, Elsevier, vol. 211(C), pages 1039-1049.
    12. Herui Cui & Tian Zhao & Ruirui Wu, 2018. "An Investment Feasibility Analysis of CCS Retrofit Based on a Two-Stage Compound Real Options Model," Energies, MDPI, vol. 11(7), pages 1-19, July.
    13. Yu, Shiwei & Li, Zhenxi & Wei, Yi-Ming & Liu, Lancui, 2019. "A real option model for geothermal heating investment decision making: Considering carbon trading and resource taxes," Energy, Elsevier, vol. 189(C).
    14. Fan, Jing-Li & Xu, Mao & Li, Fengyu & Yang, Lin & Zhang, Xian, 2018. "Carbon capture and storage (CCS) retrofit potential of coal-fired power plants in China: The technology lock-in and cost optimization perspective," Applied Energy, Elsevier, vol. 229(C), pages 326-334.
    15. Hanak, Dawid P. & Kolios, Athanasios J. & Manovic, Vasilije, 2016. "Comparison of probabilistic performance of calcium looping and chemical solvent scrubbing retrofits for CO2 capture from coal-fired power plant," Applied Energy, Elsevier, vol. 172(C), pages 323-336.
    16. Yang, Lin & Lv, Haodong & Wei, Ning & Li, Yiming & Zhang, Xian, 2023. "Dynamic optimization of carbon capture technology deployment targeting carbon neutrality, cost efficiency and water stress: Evidence from China's electric power sector," Energy Economics, Elsevier, vol. 125(C).
    17. Alshammari, Yousef M., 2021. "Scenario analysis for energy transition in the chemical industry: An industrial case study in Saudi Arabia," Energy Policy, Elsevier, vol. 150(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marie Renner, 2014. "Carbon prices and CCS investment: comparative study between the European Union and China," Working Papers 1402, Chaire Economie du climat.
    2. repec:dau:papers:123456789/12983 is not listed on IDEAS
    3. Zhou, Wenji & Zhu, Bing & Chen, Dingjiang & Zhao, Fangxian & Fei, Weiyang, 2014. "How policy choice affects investment in low-carbon technology: The case of CO2 capture in indirect coal liquefaction in China," Energy, Elsevier, vol. 73(C), pages 670-679.
    4. Wu Haibo & Liu Zhaohui, 2018. "Economic research relating to a 200 MWe oxy‐fuel combustion power plant," Greenhouse Gases: Science and Technology, Blackwell Publishing, vol. 8(5), pages 911-919, October.
    5. Dominic Woolf & Johannes Lehmann & David R. Lee, 2016. "Optimal bioenergy power generation for climate change mitigation with or without carbon sequestration," Nature Communications, Nature, vol. 7(1), pages 1-11, December.
    6. Višković, Alfredo & Franki, Vladimir & Valentić, Vladimir, 2014. "CCS (carbon capture and storage) investment possibility in South East Europe: A case study for Croatia," Energy, Elsevier, vol. 70(C), pages 325-337.
    7. Evar, Benjamin, 2011. "Conditional inevitability: Expert perceptions of carbon capture and storage uncertainties in the UK context," Energy Policy, Elsevier, vol. 39(6), pages 3414-3424, June.
    8. Lai, N.Y.G. & Yap, E.H. & Lee, C.W., 2011. "Viability of CCS: A broad-based assessment for Malaysia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(8), pages 3608-3616.
    9. Escudero, Marcos & Jiménez, Ángel & González, Celina & López, Ignacio, 2013. "Quantitative analysis of potential power production and environmental benefits of Biomass Integrated Gasification Combined Cycles in the European Union," Energy Policy, Elsevier, vol. 53(C), pages 63-75.
    10. Herui Cui & Tian Zhao & Ruirui Wu, 2018. "An Investment Feasibility Analysis of CCS Retrofit Based on a Two-Stage Compound Real Options Model," Energies, MDPI, vol. 11(7), pages 1-19, July.
    11. Wang, Dandan & Li, Sheng & Liu, Feng & Gao, Lin & Sui, Jun, 2018. "Post combustion CO2 capture in power plant using low temperature steam upgraded by double absorption heat transformer," Applied Energy, Elsevier, vol. 227(C), pages 603-612.
    12. Moura, Maria Cecilia P. & Branco, David A. Castelo & Peters, Glen P. & Szklo, Alexandre Salem & Schaeffer, Roberto, 2013. "How the choice of multi-gas equivalency metrics affects mitigation options: The case of CO2 capture in a Brazilian coal-fired power plant," Energy Policy, Elsevier, vol. 61(C), pages 1357-1366.
    13. Rammerstorfer, Margarethe & Eisl, Roland, 2011. "Carbon capture and storage—Investment strategies for the future?," Energy Policy, Elsevier, vol. 39(11), pages 7103-7111.
    14. Yang, Hang & Zhang, Yongxin & Zheng, Chenghang & Wu, Xuecheng & Chen, Linghong & Fu, Joshua S. & Gao, Xiang, 2018. "Cost estimate of the multi-pollutant abatement in coal-fired power sector in China," Energy, Elsevier, vol. 161(C), pages 523-535.
    15. Pettinau, Alberto & Ferrara, Francesca & Tola, Vittorio & Cau, Giorgio, 2017. "Techno-economic comparison between different technologies for CO2-free power generation from coal," Applied Energy, Elsevier, vol. 193(C), pages 426-439.
    16. Viebahn, Peter & Vallentin, Daniel & Höller, Samuel, 2014. "Prospects of carbon capture and storage (CCS) in India’s power sector – An integrated assessment," Applied Energy, Elsevier, vol. 117(C), pages 62-75.
    17. Zhou, Wenji & Zhu, Bing & Fuss, Sabine & Szolgayová, Jana & Obersteiner, Michael & Fei, Weiyang, 2010. "Uncertainty modeling of CCS investment strategy in China's power sector," Applied Energy, Elsevier, vol. 87(7), pages 2392-2400, July.
    18. Viebahn, Peter & Vallentin, Daniel & Höller, Samuel, 2015. "Prospects of carbon capture and storage (CCS) in China’s power sector – An integrated assessment," Applied Energy, Elsevier, vol. 157(C), pages 229-244.
    19. Nadine Heitmann & Christine Bertram & Daiju Narita, 2012. "Embedding CCS infrastructure into the European electricity system: a policy coordination problem," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 17(6), pages 669-686, August.
    20. Andreas Schröder & Friedrich Kunz & Jan Meiss & Roman Mendelevitch & Christian von Hirschhausen, 2013. "Current and Prospective Costs of Electricity Generation until 2050," Data Documentation 68, DIW Berlin, German Institute for Economic Research.
    21. Hadjipaschalis, Ioannis & Kourtis, George & Poullikkas, Andreas, 2009. "Assessment of oxyfuel power generation technologies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(9), pages 2637-2644, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:75:y:2014:i:c:p:327-340. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.