Advanced Search
MyIDEAS: Login to save this paper or follow this series

When to Invest in Carbon Capture and Storage Technology in the Presence of Uncertainty: a Mathematical Model

Contents:

Author Info

  • Walsh, Darragh
  • O'Sullivan, K.
  • Lee, W. T.
  • Devine, M.

Abstract

We present a model for determining analytically the critical threshold for investment in carbon capture and storage technology in a region where carbon costs are volatile and assuming the cost of investment decreases. We first study a deterministic model with quite general dependence on carbon price and then analyse the effect of carbon price volatility on the optimal investment decision by solving a Bellman equation with an infinite planning horizon. We find that increasing the expected carbon price volatility increases the critical investment threshold and that adoption of this technology is not optimal at current prices, in agreement with other works. However, reducing carbon price volatility by switching from carbon permits to taxes or by introducing a carbon floor as in Great Britain would accelerate the optimal adoption of this technology. Our deterministic model provides a good description of this decision problem.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.esri.ie/pubs/WP461.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number WP461.

as in new window
Length:
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:esr:wpaper:wp461

Contact details of provider:
Postal: Whitaker Square, Sir John Rogerson's Quay, Dublin 2
Phone: (353-1) 863 2000
Fax: (353-1) 863 2100
Email:
Web page: http://www.esri.ie
More information through EDIRC

Related research

Keywords:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Abadie, Luis M. & Chamorro, José M., 2008. "European CO2 prices and carbon capture investments," Energy Economics, Elsevier, vol. 30(6), pages 2992-3015, November.
  2. 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.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:esr:wpaper:wp461. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sarah Burns).

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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