IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i22p15717-d1275926.html
   My bibliography  Save this article

Enhancing Carbon Capture and Storage Deployment in the EU: A Sectoral Analysis of a Ton-Based Incentive Strategy

Author

Listed:
  • Filip Vodopić

    (Faculty of Mining, Geology and Petroleum Engineering, University of Zagreb, Pierottijeva 6, 10000 Zagreb, Croatia)

  • Domagoj Vulin

    (Faculty of Mining, Geology and Petroleum Engineering, University of Zagreb, Pierottijeva 6, 10000 Zagreb, Croatia)

  • Daria Karasalihović Sedlar

    (Faculty of Mining, Geology and Petroleum Engineering, University of Zagreb, Pierottijeva 6, 10000 Zagreb, Croatia)

  • Lucija Jukić

    (Faculty of Mining, Geology and Petroleum Engineering, University of Zagreb, Pierottijeva 6, 10000 Zagreb, Croatia)

Abstract

The EU considers carbon capture and storage (CCS) technology as an option for achieving climate goals, but its cost remains appreciable. Therefore, the purpose of this research was to investigate the implementation of a ton-based incentive system for CCS in the EU using Croatia as an example based on an analysis of the existing legislative framework in the EU and relevant tax credit provisions in the USA. A novel methodology for the design of the incentive system is presented in the form of partial allocation of the state’s auction revenues from the EU emissions trading system (ETS) into the CCS fund for five years. The CCS fund assets then incentivize the capture site for 10 years. The incentives are determined for each emitter in cement, electricity, paper and pulp, glass, oil refining, and petrochemical sectors based on varying European Union allowance (EUA) prices, CCS fund sizes, and CO 2 emission scenarios. In addition to designing the methodology, a novel method for forecasting CO 2 emissions is applied using geometric Brownian motion. The calculated incentives are categorized as underperforming, optimal, or overperforming, with upper and lower limits set to 80 and 10 EUR/t. The results are optimistic, since all sectors can be efficiently incentivized within the defined boundaries, meaning that the incentive system can be applied to all member states. The contracting of the incentives is proposed through carbon contracts for difference to avoid irregularities. Also, regulatory amendments are proposed so that emitters with emissions higher than 100 kt would have to consider CCS. Finally, the contributions are presented by proving the feasibility of the incentive system together with demonstrating its applicability to all member states.

Suggested Citation

  • Filip Vodopić & Domagoj Vulin & Daria Karasalihović Sedlar & Lucija Jukić, 2023. "Enhancing Carbon Capture and Storage Deployment in the EU: A Sectoral Analysis of a Ton-Based Incentive Strategy," Sustainability, MDPI, vol. 15(22), pages 1-34, November.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:22:p:15717-:d:1275926
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/22/15717/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/22/15717/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mesut Doğan & Sutbayeva Raikhan & Nurbossynova Zhanar & Bodaukhan Gulbagda, 2023. "Analysis of Dynamic Connectedness Relationships among Clean Energy, Carbon Emission Allowance, and BIST Indexes," Sustainability, MDPI, vol. 15(7), pages 1-13, March.
    2. Doğan, Mesut & Raikhan, Sutbayeva & Zhanar, Nurbossynova & Gulbagda, Bodaukhan, 2023. "Analysis of Dynamic Connectedness Relationships among Clean Energy, Carbon Emission Allowance, and BIST Indexes," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 15(7), pages 1-13.
    3. Paltsev, Sergey & Morris, Jennifer & Kheshgi, Haroon & Herzog, Howard, 2021. "Hard-to-Abate Sectors: The role of industrial carbon capture and storage (CCS) in emission mitigation," Applied Energy, Elsevier, vol. 300(C).
    4. Sara Yasemi & Yasin Khalili & Ali Sanati & Mohammadreza Bagheri, 2023. "Carbon Capture and Storage: Application in the Oil and Gas Industry," Sustainability, MDPI, vol. 15(19), pages 1-32, October.
    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. Jingyi Ji & Chao Li & Xinyi Ye & Yuelin Song & Jiehua Lv, 2023. "Analysis of the Spatial and Temporal Evolution of China’s Energy Carbon Emissions, Driving Mechanisms, and Decoupling Levels," Sustainability, MDPI, vol. 15(22), pages 1-23, November.
    2. Assad Ullah & Murat Tekbaş & Mesut Doğan, 2023. "The Impact of Economic Growth, Natural Resources, Urbanization and Biocapacity on the Ecological Footprint: The Case of Turkey," Sustainability, MDPI, vol. 15(17), pages 1-15, August.
    3. McLaughlin, Hope & Littlefield, Anna A. & Menefee, Maia & Kinzer, Austin & Hull, Tobias & Sovacool, Benjamin K. & Bazilian, Morgan D. & Kim, Jinsoo & Griffiths, Steven, 2023. "Carbon capture utilization and storage in review: Sociotechnical implications for a carbon reliant world," Renewable and Sustainable Energy Reviews, Elsevier, vol. 177(C).
    4. Shenghao Feng & Xiujian Peng & Philip Adams, 2021. "Energy and Economic Implications of Carbon Neutrality in China -- A Dynamic General Equilibrium Analysis," Centre of Policy Studies/IMPACT Centre Working Papers g-318, Victoria University, Centre of Policy Studies/IMPACT Centre.
    5. Tao, Huayu & Qian, Xi & Zhou, Yi & Cheng, Hongfei, 2022. "Research progress of clay minerals in carbon dioxide capture," Renewable and Sustainable Energy Reviews, Elsevier, vol. 164(C).
    6. Yidi Wan & Chengzao Jia & Wen Zhao & Lin Jiang & Zhuxin Chen, 2023. "Micro-Scale Lattice Boltzmann Simulation of Two-Phase CO 2 –Brine Flow in a Tighter REV Extracted from a Permeable Sandstone Core: Implications for CO 2 Storage Efficiency," Energies, MDPI, vol. 16(3), pages 1-26, February.
    7. Paltsev, Sergey & Gurgel, Angelo & Morris, Jennifer & Chen, Henry & Dey, Subhrajit & Marwah, Sumita, 2022. "Economic analysis of the hard-to-abate sectors in India," Energy Economics, Elsevier, vol. 112(C).
    8. Massimo Beccarello & Giacomo Di Foggia, 2023. "Review and Perspectives of Key Decarbonization Drivers to 2030," Energies, MDPI, vol. 16(3), pages 1-13, January.
    9. Alberto Maria Gambelli, 2023. "CCUS Strategies as Most Viable Option for Global Warming Mitigation," Energies, MDPI, vol. 16(10), pages 1-4, May.
    10. Nhuchhen, Daya R. & Sit, Song P. & Layzell, David B., 2022. "Decarbonization of cement production in a hydrogen economy," Applied Energy, Elsevier, vol. 317(C).
    11. Kawai, Eiji & Ozawa, Akito & Leibowicz, Benjamin D., 2022. "Role of carbon capture and utilization (CCU) for decarbonization of industrial sector: A case study of Japan," Applied Energy, Elsevier, vol. 328(C).
    12. Golrokh Sani, Ahmad & Najafi, Hamidreza & Azimi, Seyedeh Shakiba, 2022. "Dynamic thermal modeling of the refrigerated liquified CO2 tanker in carbon capture, utilization, and storage chain: A truck transport case study," Applied Energy, Elsevier, vol. 326(C).
    13. Motlaghzadeh, Kasra & Schweizer, Vanessa & Craik, Neil & Moreno-Cruz, Juan, 2023. "Key uncertainties behind global projections of direct air capture deployment," Applied Energy, Elsevier, vol. 348(C).
    14. Song Wang & Yixiao Wang & Chenxin Zhou & Xueli Wang, 2022. "Projections in Various Scenarios and the Impact of Economy, Population, and Technology for Regional Emission Peak and Carbon Neutrality in China," IJERPH, MDPI, vol. 19(19), pages 1-31, September.
    15. Griffiths, Steve & Sovacool, Benjamin K. & Furszyfer Del Rio, Dylan D. & Foley, Aoife M. & Bazilian, Morgan D. & Kim, Jinsoo & Uratani, Joao M., 2023. "Decarbonizing the cement and concrete industry: A systematic review of socio-technical systems, technological innovations, and policy options," Renewable and Sustainable Energy Reviews, Elsevier, vol. 180(C).
    16. Y.-H. Henry Chen & Erik Ens & Olivier Gervais & Hossein Hosseini & Craig Johnston & Serdar Kabaca & Miguel Molico & Sergey Paltsev & Alex Proulx & Argyn Toktamyssov, 2022. "Transition Scenarios for Analyzing Climate-Related Financial Risk," Discussion Papers 2022-1, Bank of Canada.
    17. Jin, Bo & Yao, Wenxing & Liu, Kaile & Lu, Shijian & Luo, Xiao & Liang, Zhiwu, 2022. "Self-optimizing control and safety assessment to achieve economic and safe operation for oxy-fuel combustion boiler island systems," Applied Energy, Elsevier, vol. 323(C).
    18. Y., Nandakishora & Sahoo, Ranjit K. & S., Murugan & Gu, Sai, 2023. "4E analysis of the cryogenic CO2 separation process integrated with waste heat recovery," Energy, Elsevier, vol. 278(PA).
    19. Callas, Catherine & Saltzer, Sarah D. & Steve Davis, J. & Hashemi, Sam S. & Kovscek, Anthony R. & Okoroafor, Esuru R. & Wen, Gege & Zoback, Mark D. & Benson, Sally M., 2022. "Criteria and workflow for selecting depleted hydrocarbon reservoirs for carbon storage," Applied Energy, Elsevier, vol. 324(C).
    20. Krzywanski, J. & Czakiert, T. & Nowak, W. & Shimizu, T. & Zylka, A. & Idziak, K. & Sosnowski, M. & Grabowska, K., 2022. "Gaseous emissions from advanced CLC and oxyfuel fluidized bed combustion of coal and biomass in a complex geometry facility:A comprehensive model," Energy, Elsevier, vol. 251(C).

    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:gam:jsusta:v:15:y:2023:i:22:p:15717-:d:1275926. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.