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Financing Capture Ready Coal-Fired Power Plants in China by Issuing Capture Options

Author

Listed:
  • Xi Liang

    (Judge Business School, University of Cambridge)

  • Jia Li

    (Department of Mechanical Engineering, Imperial College London)

  • Jon Gibbons

    (Department of Mechanical Engineering, Imperial College London)

  • David Reiner

    (Judge Business School, University of Cambridge)

Abstract

‘Capture Ready’ is a design concept enabling fossil fuel plants to be retrofitted more economically with carbon dioxide capture and storage (CCS) technologies, however financing the cost of capture ready can be problematic, especially in the developing world. We propose that fossil fuel plants issue tradable Capture Options to acquire financing. The Capture Option concept could move CCS forward politically in countries such as China, speed up CCS technology development, help Capture Ready investors diversify risk, and offer global warming investors an alternative investment opportunity. As a detailed case study, we assess the value of a Capture Option and Capture Ready plant for a 600 MW supercritical pulverized coal power plant in China, using a cash flow model with Monte-Carlo simulations. The gross value of Capture Ready varies from CNY3m ($0.4m) to CNY633m ($84.4m) at an 8% discount rate and the Capture Option is valued at CNY113m ($15.1m) to CNY1255m ($167.3m) for two of the four scenarios analyzed.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Xi Liang & Jia Li & Jon Gibbons & David Reiner, 2007. "Financing Capture Ready Coal-Fired Power Plants in China by Issuing Capture Options," Working Papers EPRG 0728, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg0728
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    Cited by:

    1. Bertinelli, Luisito & Camacho, Carmen & Zou, Benteng, 2014. "Carbon capture and storage and transboundary pollution: A differential game approach," European Journal of Operational Research, Elsevier, vol. 237(2), pages 721-728.

    More about this item

    Keywords

    Capture Option; Capture Ready; Carbon Capture and Storage; Climate Change; Coal-fired Electricity; China.;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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