IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-05549884.html

Profitability of CCUS Projects Amid Price Volatility: A Real Options Analysis of Carbon Credits in EOR Scenarios

Author

Listed:
  • Jean-Noël Ory

    (IAE Nancy - IAE Nancy School of Management - UL - Université de Lorraine, CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)

  • Wafaa Azira

    (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)

  • Hery Razafitombo

    (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)

Abstract

The United Nations emphasizes the urgency of deploying carbon capture, utilization, and storage (CCUS) technologies to achieve carbon neutrality. CCUS refers to processes that capture CO2 emissions, transport them, and either store or repurpose them, with enhanced oil recovery (EOR)—using CO2 to increase extraction from mature oil fields—being a primary application. This paper assesses the impact of carbon trading mechanisms on the valuation of CCUS projects using a real options framework. Real options provide a flexible approach to investment under uncertainty, considering both compound and exclusive options. Results indicate that high carbon and oil prices are key drivers of the economic viability of CCUS projects, with policy frameworks playing a pivotal role. When EOR is eligible for carbon credits under the EU-ETS, additional revenue streams enhance project value and accelerate breakeven, whereas their absence delays profitability and increases reliance on cost reductions. This study highlights the importance of aligning regulatory environments with market dynamics and demonstrates the utility of real options in evaluating sustainable projects under uncertainty.

Suggested Citation

  • Jean-Noël Ory & Wafaa Azira & Hery Razafitombo, 2025. "Profitability of CCUS Projects Amid Price Volatility: A Real Options Analysis of Carbon Credits in EOR Scenarios," Post-Print hal-05549884, HAL.
    • Handle: RePEc:hal:journl:hal-05549884
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    More about this item

    Keywords

    ;
    ;
    ;

    Statistics

    Access and download statistics

    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:hal:journl:hal-05549884. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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.