Distributional Impacts of Carbon Capture in the US Power Sector

Ana Varela Varela, Daniel Shawhan (), Christoph Funke, Maya Domeshek, Sally Robson, Steven Witkin, Dallas Burtraw and Burçin Ünel

Journal of the Association of Environmental and Resource Economists, 2024, vol. 11, issue S1, S157 - S197

Abstract: While some see carbon capture, utilization, and storage (CCUS) as crucial for cost-effective decarbonization, it faces opposition based on air pollution and equity concerns. To understand this cost–air pollution trade-off, we simulate the potential impacts of allowing CCUS deployment in the US power sector under plausible climate policies. We show that the existence of this trade-off critically depends on the underlying policy, which affects the type of generation CCUS could displace: under a policy that incentivizes coal generation, CCUS might improve health outcomes and reduce costs. When we disaggregate our results, we find that the air pollution (PM2.5) effects of allowing CCUS, positive or negative, are largest for Black and low-income populations. We show that allowing CCUS can yield energy-cost savings, particularly benefiting lower-income communities. Our sensitivity analyses highlight the effects of uncertainties on costs and benefits. Overall, this study contributes to our understanding of broader distributional consequences of allowing CCUS.

Date: 2024
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