CO 2 Capture Rate Sensitivity Versus Purchase of CO 2 Quotas. Optimizing Investment Choice for Electricity Sector

Paula Coussy (paula.coussy@ifpen.fr) and Ludovic Raynal
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Paula Coussy: IFPEN - IFP Energies nouvelles
Ludovic Raynal: IFPEN - IFP Energies nouvelles

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Abstract: Carbon capture technology (and associated storage), applied to power plants, reduces atmospheric CO2 emissions. This article demonstrates that, in the particular case of the deployment phase of CO2 capture technology during which CO2 quota price may be low, capturing less than 90% of total CO2 emissions from power plants can be economically attractive. Indeed, for an electric power company capture technology is interesting, only if the discounted marginal cost of capture is lower than the discounted marginal cost of purchased quotas. When CO2 price is low, it is interesting to have flexibility and reduce the overall capture rate of the site, by stopping the capture system of one of the combustion trains if the site has multiple ones, or by adopting less than 90% CO2 capture rate.

Keywords: CO2 Capture; CO2 quotas; price; rate sensitivity; marginal cost (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-ene and nep-env
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Published in Oil & Gas Science and Technology - Revue d'IFP Energies nouvelles, 2014, 69 (5), pp.785 - 791. ⟨10.2516/ogst/2013181⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01085280

DOI: 10.2516/ogst/2013181

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