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Building infrastructures for Fossil- and Bio-energy with Carbon Capture and Storage: insights from a cooperative game-theoretic perspective

E. Jagu and O. Massol

Working Papers from Department of Economics, City University London

Abstract: This paper examines the deployment of a shared CO2 transportation infrastructure needed to support the combined emergence of Bio-energy with Carbon Capture and Storage (BECCS) and Fossil energy with Carbon Capture and Storage (CCS). We develop a cooperative game-theoretic approach to: (i) examine the conditions needed for its construction to be decided, and (ii) determine the break-even CO2 value needed to build such a shared infrastructure. In particular, we highlight that, as biogenic emissions are overlooked in currently-implemented carbon accounting frameworks, BECCS and CCS emitters face asymmetric conditions for joining a shared infrastructure. We thus further examine the influence of these carbon accounting considerations by assessing and comparing the break-even CO2 values obtained under alternative accounting rules. We apply this modeling framework to a large contemporary BECCS/CCS case-study in Sweden. Our results indicate that sustainable and incentive-compatible cooperation schemes can be implemented if the value of CO2 is high enough and show how that value varies depending on the carbon accounting framework retained for negative emissions and the nature of the infrastructure operators. In the most advantageous scenario, the CO2 value needs to reach 112€/tCO2, while the current Swedish carbon tax amounts to 110€/tCO2. Overall, these findings position pragmatic policy recommendations for local BECCS deployment.

Keywords: Bio-energy with Carbon Capture and Storage; Negative emissions; CO2 transportation; infrastructure; cooperative game theory; carbon accounting (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-ene, nep-env, nep-gth and nep-tre
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