Optimal Timing of Carbon Capture and Storage Policies - a Social Planner's View

"Carbon capture and storage (CCS) is considered one of the most realistic and plausi- " ble options for reducing greenhouse gas (GHG) emissions from large pollution sources. However, CCS deployment is costly. This paper considers the social cost of CCS projects and GHG damage from a central planer's point of view, providing clear in- formation about when each player should deploy CCS. The findings are twofold: (1) given the heterogeneity of players, it is not socially optimal for all players to start CCS projects at the same time; instead, the player that has a cost advantage should start first; (2) it may be socially desirable for the player with a cost disadvantage never starts CCS. We show the conditions that support both possibilities. The second find- ing provides a clear policy guideline for the decision-maker: reduce the costs of the high-cost player in order to reduce global GHG emissions, provided that is the aim of the supranational institute.