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CCS - Failing to Pass Decision Gates

Author

Listed:
  • Magne Emhjellen
  • Petter Osmundsen

Abstract

Socio-economic criteria for climate projects have been used in analysing the value of the climate benefit of a reduction in CO2. These reports are optimistic, yet CCS demonstration plants are not implemented as expected. Little attention has been devoted to profitability assessments based on commercial considerations. Economic valuation of climate projects, seen from the perspective of the commercial companies which are to implement the projects, is the subject of this article. We examine key economic parameters of 27 oil and gas projects and compare it to a CCS project. We find that the CCS project ranks the lowest and is unlikely to be implemented by a private company. Our findings may explain why it is hard for oil companies to justify climate projects in their portfolios.

Suggested Citation

  • Magne Emhjellen & Petter Osmundsen, 2013. "CCS - Failing to Pass Decision Gates," CESifo Working Paper Series 4525, CESifo.
    • Handle: RePEc:ces:ceswps:_4525
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    References listed on IDEAS

    as
    1. Osmundsen, Petter & Emhjellen, Magne, 2010. "CCS from the gas-fired power station at Kårstø? A commercial analysis," Energy Policy, Elsevier, vol. 38(12), pages 7818-7826, December.
    2. Magne Emhjellen & Kjell Hausken & Petter Osmundsen, 2006. "The choice of strategic core – impact of financial volume," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 26(1/2), pages 136-157.
    3. Emhjellen, Magne & Osmundsen, Petter, 2012. "Rate of return requirement for climate versus petroleum projects," UiS Working Papers in Economics and Finance 2012/7, University of Stavanger.
    4. Misund, Bård & Asche, Frank & Osmundsen, Petter, 2008. "Industry upheaval and valuation: Empirical evidence from the international oil and gas industry," The International Journal of Accounting, Elsevier, vol. 43(4), pages 398-424, December.
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    Cited by:

    1. Selosse, Sandrine & Ricci, Olivia, 2017. "Carbon capture and storage: Lessons from a storage potential and localization analysis," Applied Energy, Elsevier, vol. 188(C), pages 32-44.

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    More about this item

    Keywords

    climate projects; decision analysis; CO2;
    All these keywords.

    JEL classification:

    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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