The impact of carbon capture and storage on overall mitigation policy

Policy makers, as well as many economists, recognize geological carbon capture and storage (CCS) as an option for avoiding costly emission reductions. While an extreme perspective is to envision CCS as a magic bullet to solve the issue of climate change, a more balanced economics perspective would situate this approach within a portfolio of mitigation actions. CCS can be implemented with two purposes: it can act as a substitute for other technological efforts to reach a given environmental target and it offers the potential for additional emission reductions to reach a 'safer' climate target. In order to balance these two possible ways of utilizing CCS and to assess their respective effects on early policy strategies, we have undertaken a twofold numerical experiment. First, a cost-efficiency analysis was undertaken, where the sole effect of CCS was substitution for other efforts. This was followed by a cost-benefit analysis where both purposes had to be balanced. We find that future availability of CCS is less of a reason to relax near-term abatement efforts than what could be inferred from previous analyses. Moreover, the cost-benefit analysis indicates that environmental targets should be more ambitious when CCS is included in the picture.