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The Economics of Geological CO2 Storage and Leakage

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  • van der Zwaan, Bob
  • Gerlagh, Reyer

Abstract

The economics of CO2 capture and storage in relation to the possibility of significant leakage of CO2 from geological reservoirs once this greenhouse gas has been stored artificially underground will be among the main determinants of whether CCS can significantly contribute to a deep cut in global CO2 emissions. This paper presents an analysis of the economic and climatic implications of the large-scale use of CCS for reaching a stringent climate change control target, when geological CO2 leakage is accounted for. The natural scientific uncertainties regarding the rates of possible leakage of CO2 from geological reservoirs are likely to remain large for a long time to come. We present a qualitative description, a concise analytical inspection, as well as a more detailed integrated assessment model, proffering insight into the economics of geological CO2 storage and leakage. Our model represents three main CO2 emission reduction options: energy savings, a carbon to non-carbon energy transition and the use of CCS. We find CCS to remain a valuable option even with CO2 leakage of a few %/yr, well above the maximum seepage rates that we think are likely from a geo-scientific point of view.

Suggested Citation

  • van der Zwaan, Bob & Gerlagh, Reyer, 2008. "The Economics of Geological CO2 Storage and Leakage," Climate Change Modelling and Policy Working Papers 6372, Fondazione Eni Enrico Mattei (FEEM).
  • Handle: RePEc:ags:feemcc:6372
    DOI: 10.22004/ag.econ.6372
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    References listed on IDEAS

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    Cited by:

    1. Wei Jin & ZhongXiang Zhang, 2018. "Capital Accumulation, Green Paradox, and Stranded Assets: An Endogenous Growth Perspective," Working Papers 2018.33, Fondazione Eni Enrico Mattei.
    2. Lilliestam, Johan & Bielicki, Jeffrey M. & Patt, Anthony G., 2012. "Comparing carbon capture and storage (CCS) with concentrating solar power (CSP): Potentials, costs, risks, and barriers," Energy Policy, Elsevier, vol. 47(C), pages 447-455.
    3. García, Jorge H. & Torvanger, Asbjørn, 2019. "Carbon leakage from geological storage sites: Implications for carbon trading," Energy Policy, Elsevier, vol. 127(C), pages 320-329.
    4. Schmidt, Johannes & Leduc, Sylvain & Dotzauer, Erik & Schmid, Erwin, 2011. "Cost-effective policy instruments for greenhouse gas emission reduction and fossil fuel substitution through bioenergy production in Austria," Energy Policy, Elsevier, vol. 39(6), pages 3261-3280, June.
    5. Minh Ha-Duong & Rodica Loisel, 2009. "Zero is the only acceptable leakage rate for geologically stored CO2: an editorial comment," Post-Print hal-00348128, HAL.
    6. Nadine Heitmann & Christine Bertram & Daiju Narita, 2012. "Embedding CCS infrastructure into the European electricity system: a policy coordination problem," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 17(6), pages 669-686, August.
    7. Grimaud, André & Rouge, Luc, 2014. "Carbon sequestration, economic policies and growth," Resource and Energy Economics, Elsevier, vol. 36(2), pages 307-331.
    8. Matthias Kalkuhl & Ottmar Edenhofer & Kai Lessmann, 2015. "The Role of Carbon Capture and Sequestration Policies for Climate Change Mitigation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(1), pages 55-80, January.
    9. Alain Jean-Marie & Michel Moreaux & Mabel Tidball, 2011. "Carbon sequestration in leaky reservoirs," Post-Print hal-00863230, HAL.
    10. Soren Lindner & Sonja Peterson & Wilhelm Windhorst, 2010. "An economic and environmental assessment of carbon capture and storage (CCS) power plants: a case study for the City of Kiel," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 53(8), pages 1069-1088.
    11. Hang Deng & Jeffrey M. Bielicki & Michael Oppenheimer & Jeffrey P. Fitts & Catherine A. Peters, 2017. "Leakage risks of geologic CO2 storage and the impacts on the global energy system and climate change mitigation," Climatic Change, Springer, vol. 144(2), pages 151-163, September.
    12. Derek Lemoine & Sabine Fuss & Jana Szolgayova & Michael Obersteiner & Daniel Kammen, 2012. "The influence of negative emission technologies and technology policies on the optimal climate mitigation portfolio," Climatic Change, Springer, vol. 113(2), pages 141-162, July.
    13. Kern, Florian & Gaede, James & Meadowcroft, James & Watson, Jim, 2016. "The political economy of carbon capture and storage: An analysis of two demonstration projects," Technological Forecasting and Social Change, Elsevier, vol. 102(C), pages 250-260.
    14. Jian Xie & Keni Zhang & Litang Hu & Yongsheng Wang & Maoshan Chen, 2015. "Understanding the carbon dioxide sequestration in low‐permeability saline aquifers in the Ordos Basin with numerical simulations," Greenhouse Gases: Science and Technology, Blackwell Publishing, vol. 5(5), pages 558-576, October.
    15. Narita, Daiju & Klepper, Gernot, 2015. "Economic incentives for carbon dioxide storage under uncertainty: A real options analysis," Kiel Working Papers 2002, Kiel Institute for the World Economy (IfW).
    16. Kyriaki Kelektsoglou, 2018. "Carbon Capture and Storage: A Review of Mineral Storage of CO 2 in Greece," Sustainability, MDPI, Open Access Journal, vol. 10(12), pages 1-17, November.
    17. Peter Stigson & Anders Hansson & Mårten Lind, 2012. "Obstacles for CCS deployment: an analysis of discrepancies of perceptions," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 17(6), pages 601-619, August.
    18. Bob van der Zwaan & Reyer Gerlagh, 2016. "Offshore CCS and ocean acidification: a global long-term probabilistic cost-benefit analysis of climate change mitigation," Climatic Change, Springer, vol. 137(1), pages 157-170, July.
    19. van der Zwaan, Bob & Keppo, Ilkka & Johnsson, Filip, 2013. "How to decarbonize the transport sector?," Energy Policy, Elsevier, vol. 61(C), pages 562-573.
    20. Schmidt, Johannes & Leduc, Sylvain & Dotzauer, Erik & Kindermann, Georg & Schmid, Erwin, 2010. "Cost-effective CO2 emission reduction through heat, power and biofuel production from woody biomass: A spatially explicit comparison of conversion technologies," Applied Energy, Elsevier, vol. 87(7), pages 2128-2141, July.
    21. Sreenivasulu, B. & Gayatri, D.V. & Sreedhar, I. & Raghavan, K.V., 2015. "A journey into the process and engineering aspects of carbon capture technologies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 1324-1350.

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    More about this item

    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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