Long-run climate change mitigation projections made by institutions from the Intergovernmental Panel on Climate Change to national and sub-national governments suggest that carbon capture, utilization and storage (CCUS) may play a key role in achieving mid- and late-century decarbonization goals. Despite the important role envisioned for CCUS by institutions and researchers, however, development has been slow for industrial emissions and power sector applications considered potentially well-suited for CCUS. Recent work by the National Academies suggests that geologic sequestration is ready for large-scale deployment from a physical science perspective. However, research in economics, operations research, political science, and the other social sciences seeking to understand the likelihood of deploying CCUS at scale, the barriers to doing so, and the tradeoffs involved in public policies promoting CCUS, remains thin.
With support from the Alfred P. Sloan Foundation, researchers at The University of Texas at Austin and the University of Wyoming are engaged in a three-year research project on these topics. The project is directed by Sheila Olmstead (UT Austin), Ben Leibowicz (UT Austin), Chuck Mason (Wyoming), and Andrew Waxman (UT Austin). One important goal of our project is to increase the number and diversity of scholars in economics and the other social sciences conducting work on CCUS.
Toward this goal, the team called for proposals on CCUS economics and policy in early 2022. We invited prospective authors to submit proposals for new, original research papers on any aspect of CCUS economics and policy. We were able to support honoraria of $12,000 for up to six selected papers. Authors of selected papers will be expected to participate in up to four one-hour virtual workshops per academic year on different aspects of CCUS technology and policy in Spring 2022–Fall 2024 as part of a network of scholars working on these issues, and to present their research paper at a conference held in Spring 2024 at The University of Texas at Austin. We will seek to publish the supported papers and others by the UT and UW researchers in a special issue of a peer-reviewed economics or policy journal, though authors may choose to publish their papers elsewhere.
Projects
University of Dayton and Carbon Solutions LLC
Joseph Duggan Jr., Jonathan Ogland-Hand, Michael Ford, Richard Middleton
In this proposal we describe our plans for future research building on a current game theoretic analysis of CO2 capture and storage (CCS) in a wholesale electricity market. Having developed a stylized model of Cournot competition in a wholesale electricity market with both a subsidy for CCS activities and a tax on carbon emissions, we are proposing to further explore the incentive properties of CCS policies. We will analyze the market design challenges posed by CCS using the tools of mechanism design theory, information economics, and the economics of industrial organization to explore issues including the truthful revelation of CCS costs, investment incentives and competitive effects, and how different CCS ownership structures may impact market performance.
Mapping the Source Space for Carbon Capture and Utilization
University of Texas at Austin
Michael Baldea
The key research question that we will pursue is to develop a comprehensive mapping of the types of CO2 emitters, and their respective flue gas characteristics. The CO2 sources will be classified by industry, with mean values and upper and lower bounds or important flue gas parameters (flow rate, composition including CO2 concentration) will be collected in a freely available database and reported in a journal article.
Robust Carbon Dioxide Utilization Markets
University of Waterloo
Dr. Juan Moreno-Cruz
My proposal is to develop an economic framework of the carbon economy. There are three approaches
I will develop in the proposed paper. First, I will consider a static general equilibrium model of a carbon economy to ask questions about market structure, competition and policy. Second, I will consider a dynamic general equilibrium model to ask questions about the sort of policy interventions that will be required to increase the potential of the carbon economy. Third, in section 2.3, I will consider an integrated assessment model and analyze possible expansion pathways to enable an efficient use of available technological options.
University of Maryland at College Park and China University of Petroleum Beijing
Yueming (Lucy) Qiu, Yingdan Mei, Pengfei Liu
- How do CCUS projects impact nearby housing prices?
- How do such impacts vary by CCUS technology and socio-economic factors, and
between U.S. and China?
We will use nationwide data on existing CCUS projects in U.S. and China as well as individual-property level housing transaction prices. Our main methods will be a repeated sales
or fixed effects panel regression approach, as well as a triple difference (DDD) approach.
Economically Viable Carbon Capture for Electro-Decarbonization of the US Economy
New York University
Charalmpos Avraam, Yury Dvorkin, and Alice Nuz
We will develop a techno-economic framework to evaluate performance of large-scale deployment of low- or zero-carbon industrial technologies under various policy and economic scenarios. We will assess optimal deployment of these technologies and examine pathways to electrify chemical production using ethylene, a high-volume building block of the chemical industry, as a case study. Our preliminary results indicate that electrification can reduce total emissions and therefore change the optimal distribution of resources across sectors.
University of Massachusetts Amherst
Paola Furlanetto, Bridget Diana, Erin Baker, Michael Ash
We will investigate how the application of Carbon Capture, Use, and Sequestration (CCUS) technology in the US electricity system may affect local pollution with a focus on Environmental Justice (EJ) communities. We examine alternative technologies and policies that can achieve both carbon reduction and local air-quality co-benefits with attention to environmental justice. We conduct a policy analysis with a range of plausible policy alternatives and combine: sophisticated technical and economic modeling of the electricity system; high-quality modeling of local pollution impacts; and sensitivity analysis of technological and policy uncertainties.
