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What’s the most cost-effective policy of CO2 targeted reduction: An application of aggregated economic technological model with CCS?

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  • Duan, Hong-Bo
  • Fan, Ying
  • Zhu, Lei

Abstract

Carbon capture and storage (CCS) technology, which has been considering one of the effective carbon reduction options, is induced in the self-constructed aggregated economic technological model in this paper, and the development potential of CCS under the given climate policies is depicted. We explore the most cost-effective way of targeted CO2 abatement to reach specific climate stabilization targets by comparing the climate policies including subsidies for alternative energy, tax for fossil fuel and a combination of both. We also investigate the impacts of these policy instruments on the energy demand, consumptions, R&D activities and the performances of various carbon-free energy technologies. The main findings are as follows: first, the subsidy policy alone never offers the cheapest option to meet the reduction targets, and the policy of carbon tax is proved to be the most cost-effective way of CO2 abatement. Second, subsidy plays a limit role in promoting R&D activities of non-carbon technologies, which are driven more by the mix policy. Third, we find that the implementation of carbon tax will largely promote the development of CCS, and the share of fossil technology equipped with CCS in total will have reached around 15% by the end of 21 century. Finally, the CO2 reduction ratio for CCS keeps increasing in the present of carbon tax, and pathway of carbon abatement contribution for CCS is hump-shaped when turning to the mix policy case.

Suggested Citation

  • Duan, Hong-Bo & Fan, Ying & Zhu, Lei, 2013. "What’s the most cost-effective policy of CO2 targeted reduction: An application of aggregated economic technological model with CCS?," Applied Energy, Elsevier, vol. 112(C), pages 866-875.
  • Handle: RePEc:eee:appene:v:112:y:2013:i:c:p:866-875
    DOI: 10.1016/j.apenergy.2013.01.047
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    8. Zhang, Shuwei & Bauer, Nico & Luderer, Gunnar & Kriegler, Elmar, 2014. "Role of technologies in energy-related CO2 mitigation in China within a climate-protection world: A scenarios analysis using REMIND," Applied Energy, Elsevier, vol. 115(C), pages 445-455.
    9. Cheng, Rui & Xu, Zhaofeng & Liu, Pei & Wang, Zhe & Li, Zheng & Jones, Ian, 2015. "A multi-region optimization planning model for China’s power sector," Applied Energy, Elsevier, vol. 137(C), pages 413-426.
    10. Zhang, Xian & Wang, Xingwei & Chen, Jiajun & Xie, Xi & Wang, Ke & Wei, Yiming, 2014. "A novel modeling based real option approach for CCS investment evaluation under multiple uncertainties," Applied Energy, Elsevier, vol. 113(C), pages 1059-1067.
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    14. Duan, Hong-Bo & Zhang, Gu-Peng & Zhu, Lei & Fan, Ying & Wang, Shou-Yang, 2016. "How will diffusion of PV solar contribute to China׳s emissions-peaking and climate responses?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 1076-1085.
    15. Noel, Lance & McCormack, Regina, 2014. "A cost benefit analysis of a V2G-capable electric school bus compared to a traditional diesel school bus," Applied Energy, Elsevier, vol. 126(C), pages 246-255.
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    17. Yi, Bo-Wen & Xu, Jin-Hua & Fan, Ying, 2016. "Inter-regional power grid planning up to 2030 in China considering renewable energy development and regional pollutant control: A multi-region bottom-up optimization model," Applied Energy, Elsevier, vol. 184(C), pages 641-658.
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    19. Duan, Hong-Bo & Zhu, Lei & Fan, Ying, 2014. "Optimal carbon taxes in carbon-constrained China: A logistic-induced energy economic hybrid model," Energy, Elsevier, vol. 69(C), pages 345-356.

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