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Efficiency of policy instruments for CCS deployment

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  • Dominique Finon

Abstract

Policy instruments for carbon capture and storage (CCS) technology investment during the learning phase are analysed and compared. The focus is on specific barriers to investment in learning during early commercial deployment. Imperfections in the carbon price signal and market failures from barriers indicate a need for support during the learning investment phase and the initial roll out of CCS in electricity generation. Different ways for CCS technology to cross the so-called investment 'death valley' are analysed and compared: a command and control instrument (CCS mandate), investment support (grant, tax credit, loan guarantee, subsidy by trust fund) and production subsidies (guaranteed carbon price, feed-in price, etc.). Three criteria are used in this comparison: effectiveness, static efficiency and dynamic efficiency. Policy instruments need to be adapted to the technological and commercial maturity of the CCS system. Mandate policies require handling with much care, and subsidization mechanisms must be designed to be market-oriented.

Suggested Citation

  • Dominique Finon, 2012. "Efficiency of policy instruments for CCS deployment," Climate Policy, Taylor & Francis Journals, vol. 12(2), pages 237-254, March.
    • Handle: RePEc:taf:tcpoxx:v:12:y:2012:i:2:p:237-254
    DOI: 10.1080/14693062.2011.605702
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    Cited by:

    1. Vögele, Stefan & Rübbelke, Dirk, 2013. "Decisions on investments in photovoltaics and carbon capture and storage: A comparison between two different greenhouse gas control strategies," Energy, Elsevier, vol. 62(C), pages 385-392.
    2. Nemet, Gregory F. & Zipperer, Vera & Kraus, Martina, 2018. "The valley of death, the technology pork barrel, and public support for large demonstration projects," Energy Policy, Elsevier, vol. 119(C), pages 154-167.
    3. Turner, Karen & Race, Julia & Alabi, Oluwafisayo & Katris, Antonios & Swales, J. Kim, 2021. "Policy options for funding carbon capture in regional industrial clusters: What are the impacts and trade-offs involved in compensating industry competitiveness loss?," Ecological Economics, Elsevier, vol. 184(C).
    4. Sander Akkermans & Juan Luis Martín-Ortega & Ioannis Sebos & María José López-Blanco, 2023. "Exploring long-term mitigation pathways for a net zero Tajikistan," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 28(3), pages 1-26, March.
    5. Nemet, Gregory F. & Baker, Erin & Jenni, Karen E., 2013. "Modeling the future costs of carbon capture using experts' elicited probabilities under policy scenarios," Energy, Elsevier, vol. 56(C), pages 218-228.
    6. Wähling, Lara-Sophie & Fridahl, Mathias & Heimann, Tobias & Merk, Christine, 2023. "The sequence matters: Expert opinions on policy mechanisms for bioenergy with carbon capture and storage," Open Access Publications from Kiel Institute for the World Economy 275739, Kiel Institute for the World Economy (IfW Kiel).

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