IDEAS home Printed from https://ideas.repec.org/p/cam/camdae/1430.html
   My bibliography  Save this paper

Strategies for Financing Large-scale Carbon Capture and Storage Power Plants in China

Author

Listed:
  • Xi Liang
  • Hengwei Liu
  • David Reiner

Abstract

Building on previous stakeholder consultations from 2006 to 2010, we conduct a financial analysis for a generic CCS power plant in China. In comparison with conventional thermal generation technologies, a coal-fired power plant with CCS requires either a 70% higher on-grid electricity tariff or carbon price support of approximately US$50/tonne CO2 in the absence of any other incentive mechanisms or financing strategies. Given the difficulties of relying on any one single measure to finance a large-scale CCS power plant in China, we explore a combination of possible financing mechanisms. Potential measures available for increasing the return on the CCS investment include: enhanced oil recovery (EOR), a premium electricity tariff, and operational investment flexibility (e.g. solvent storage, upgradability). A simulation found that combining several financing options could not only provide private investors with a 12% to 18% return on equity (ROE), but also significantly reduce the required on-grid tariff to a level that is very close to the tariff level of existing coal-fired power plants and much lower than the tariffs for natural gas combined cycle and nuclear power plants. Therefore, we suggest that a combination of existing financing measures could trigger private investment in a large-scale CCS power plant in China.

Suggested Citation

  • Xi Liang & Hengwei Liu & David Reiner, 2014. "Strategies for Financing Large-scale Carbon Capture and Storage Power Plants in China," Cambridge Working Papers in Economics 1430, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:1430
    as

    Download full text from publisher

    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1430.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Liang, Xi & Reiner, David & Li, Jia, 2011. "Perceptions of opinion leaders towards CCS demonstration projects in China," Applied Energy, Elsevier, vol. 88(5), pages 1873-1885, May.
    2. Bowen, Frances, 2011. "Carbon capture and storage as a corporate technology strategy challenge," Energy Policy, Elsevier, vol. 39(5), pages 2256-2264, May.
    3. Xi Liang & David Reiner & Jon Gibbins & Jia Li, 2010. "Getting Ready for Carbon Capture and Storage by Issuing Capture Options," Environment and Planning A, , vol. 42(6), pages 1286-1307, June.
    4. Gibbins, Jon & Chalmers, Hannah, 2008. "Preparing for global rollout: A `developed country first' demonstration programme for rapid CCS deployment," Energy Policy, Elsevier, vol. 36(2), pages 501-507, February.
    5. Das, Dilip K., 2009. "The evolution of renminbi yuan and the protracted debate on its undervaluation: An integrated review," Journal of Asian Economics, Elsevier, vol. 20(5), pages 570-579, September.
    6. Rubin, Edward S. & Chen, Chao & Rao, Anand B., 2007. "Cost and performance of fossil fuel power plants with CO2 capture and storage," Energy Policy, Elsevier, vol. 35(9), pages 4444-4454, September.
    7. Hammond, G.P. & Akwe, S.S. Ondo & Williams, S., 2011. "Techno-economic appraisal of fossil-fuelled power generation systems with carbon dioxide capture and storage," Energy, Elsevier, vol. 36(2), pages 975-984.
    8. Liu, Hengwei & Liang, Xi, 2011. "Strategy for promoting low-carbon technology transfer to developing countries: The case of CCS," Energy Policy, Elsevier, vol. 39(6), pages 3106-3116, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Jia & Liang, Xi & Cockerill, Tim, 2011. "Getting ready for carbon capture and storage through a ‘CCS (Carbon Capture and Storage) Ready Hub’: A case study of Shenzhen city in Guangdong province, China," Energy, Elsevier, vol. 36(10), pages 5916-5924.
    2. Valentina Kashintseva & Wadim Strielkowski & Justas Streimikis & Tatiana Veynbender, 2018. "Consumer Attitudes towards Industrial CO 2 Capture and Storage Products and Technologies," Energies, MDPI, vol. 11(10), pages 1-14, October.
    3. Lai, N.Y.G. & Yap, E.H. & Lee, C.W., 2011. "Viability of CCS: A broad-based assessment for Malaysia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(8), pages 3608-3616.
    4. Pettinau, Alberto & Ferrara, Francesca & Tola, Vittorio & Cau, Giorgio, 2017. "Techno-economic comparison between different technologies for CO2-free power generation from coal," Applied Energy, Elsevier, vol. 193(C), pages 426-439.
    5. Meleesa Naughton & Richard C. Darton & Fai Fung, 2012. "Could Climate Change Limit Water Availability for Coal-Fired Electricity Generation with Carbon Capture and Storage? A UK Case Study," Energy & Environment, , vol. 23(2-3), pages 265-282, May.
    6. Jiang, Xi & Akber Hassan, Wasim A. & Gluyas, Jon, 2013. "Modelling and monitoring of geological carbon storage: A perspective on cross-validation," Applied Energy, Elsevier, vol. 112(C), pages 784-792.
    7. Li, Jia & Tharakan, Pradeep & Macdonald, Douglas & Liang, Xi, 2013. "Technological, economic and financial prospects of carbon dioxide capture in the cement industry," Energy Policy, Elsevier, vol. 61(C), pages 1377-1387.
    8. Jiang, Xi, 2011. "A review of physical modelling and numerical simulation of long-term geological storage of CO2," Applied Energy, Elsevier, vol. 88(11), pages 3557-3566.
    9. Yao, Xing & Zhong, Ping & Zhang, Xian & Zhu, Lei, 2018. "Business model design for the carbon capture utilization and storage (CCUS) project in China," Energy Policy, Elsevier, vol. 121(C), pages 519-533.
    10. Li, Jia & Liang, Xi & Cockerill, Tim & Gibbins, Jon & Reiner, David, 2012. "Opportunities and barriers for implementing CO2 capture ready designs: A case study of stakeholder perceptions in Guangdong, China," Energy Policy, Elsevier, vol. 45(C), pages 243-251.
    11. Rohlfs, Wilko & Madlener, Reinhard, 2013. "Assessment of clean-coal strategies: The questionable merits of carbon capture-readiness," Energy, Elsevier, vol. 52(C), pages 27-36.
    12. Siefert, Nicholas S. & Chang, Brian Y. & Litster, Shawn, 2014. "Exergy and economic analysis of a CaO-looping gasifier for IGFC–CCS and IGCC–CCS," Applied Energy, Elsevier, vol. 128(C), pages 230-245.
    13. Pettinau, Alberto & Ferrara, Francesca & Amorino, Carlo, 2013. "Combustion vs. gasification for a demonstration CCS (carbon capture and storage) project in Italy: A techno-economic analysis," Energy, Elsevier, vol. 50(C), pages 160-169.
    14. Ming, Zeng & Shaojie, Ouyang & Yingjie, Zhang & Hui, Shi, 2014. "CCS technology development in China: Status, problems and countermeasures—Based on SWOT analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 39(C), pages 604-616.
    15. Zhao, Tian & Liu, Zhixin, 2019. "A novel analysis of carbon capture and storage (CCS) technology adoption: An evolutionary game model between stakeholders," Energy, Elsevier, vol. 189(C).
    16. Lei Zhu & Xing Yao & Xian Zhang, 2020. "Evaluation of cooperative mitigation: captured carbon dioxide for enhanced oil recovery," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 25(7), pages 1261-1285, October.
    17. Jung, Jung-Yeul & Huh, Cheol & Kang, Seong-Gil & Seo, Youngkyun & Chang, Daejun, 2013. "CO2 transport strategy and its cost estimation for the offshore CCS in Korea," Applied Energy, Elsevier, vol. 111(C), pages 1054-1060.
    18. Tola, Vittorio & Pettinau, Alberto, 2014. "Power generation plants with carbon capture and storage: A techno-economic comparison between coal combustion and gasification technologies," Applied Energy, Elsevier, vol. 113(C), pages 1461-1474.
    19. Višković, Alfredo & Franki, Vladimir & Valentić, Vladimir, 2014. "CCS (carbon capture and storage) investment possibility in South East Europe: A case study for Croatia," Energy, Elsevier, vol. 70(C), pages 325-337.
    20. Abadie, Luis M. & Chamorro, José M., 2008. "European CO2 prices and carbon capture investments," Energy Economics, Elsevier, vol. 30(6), pages 2992-3015, November.

    More about this item

    Keywords

    Carbon capture and storage; Coal-fired power plant; Electricity; Finance; China;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cam:camdae:1430. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jake Dyer (email available below). General contact details of provider: https://www.econ.cam.ac.uk/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.