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Carbon storage: the economic efficiency of storing CO2 in leaky reservoirs

Author

Listed:
  • Minh Ha-Duong

    () (Department of Engineering and Public Policy, Carnegie Mellon University - Aucune, CIRED - Centre International de Recherche sur l'Environnement et le Développement - ENGREF - Ecole Nationale du Génie Rural, des Eaux et des Forêts - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • David Keith

    (Department of Engineering and Public Policy, Carnegie Mellon University - Aucune, Department of Chemical and Petroleum Engineering [Calgary] - University of Calgary)

Abstract

Fossil fuels can be used with minimal atmospheric emissions of carbon dioxide by capturing and storing the CO2 away in geologic structures. However, stored CO2 can leak back to the atmosphere reducing the utility of this technology. To explore the trade-offs between discounting, leakage, the cost of sequestration and the energy penalty (the energy necessary to capture, transport and inject carbon underground), we derive analytic expressions for the value of leaky CO2 storage compared to perfect storage when storage is a marginal component of the energy system. If the annual leak rate is 1% and the discount rate is 4%, for example, then CO2 mitigation using leaky storage is worth 80% of mitigation with perfect storage. Using an integrated assessment numerical model (DIAM) to explore the role of leakage when CO2 storage is non-marginal, we find that a leakage rate of 0.1% is nearly the same as perfect storage while a leakage rate of 0.5% renders storage unattractive. The possibility of capturing CO2 from the air, not only from flue gases, makes storage with higher leakage rates interesting. Finally, we speculate about the role of imperfect carbon storage in carbon accounting and trading.

Suggested Citation

  • Minh Ha-Duong & David Keith, 2003. "Carbon storage: the economic efficiency of storing CO2 in leaky reservoirs," Post-Print halshs-00003927, HAL.
  • Handle: RePEc:hal:journl:halshs-00003927
    DOI: 10.1007/s10098-003-0213-z
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00003927
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    Citations

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    Cited by:

    1. Niko Jaakkola, 2013. "Monopolistic Sequestration of European Carbon Emissions," OxCarre Working Papers 098, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    2. Minh Ha-Duong & Rodica Loisel, 2011. "Actuarial risk assessment of expected fatalities attributable to carbon capture and storage in 2050," Post-Print halshs-00487175, HAL.
    3. Narita, Daiju, 2008. "The use of CCS in global carbon management: simulation with the DICE model," Kiel Working Papers 1440, Kiel Institute for the World Economy (IfW).
    4. Laurent Gilotte & Valentina Bosetti, 2006. "Carbon capture and sequestration: how much does this uncertain option affect near-term policy choices?," Working Papers halshs-00007298, HAL.
    5. Sven Bode & Martina Jung, 2006. "Carbon dioxide capture and storage—liability for non-permanence under the UNFCCC," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 6(2), pages 173-186, June.
    6. Valentina Bosetti & Laurent Gilotte, 2005. "Carbon Capture and Sequestration: How Much Does this Uncertain Option Affect Near-Term Policy Choices?," Working Papers 2005.86, Fondazione Eni Enrico Mattei.
    7. Ghorbani, Afshin & Rahimpour, Hamid Reza & Ghasemi, Younes & Zoughi, Somayeh & Rahimpour, Mohammad Reza, 2014. "A Review of Carbon Capture and Sequestration in Iran: Microalgal Biofixation Potential in Iran," Renewable and Sustainable Energy Reviews, Elsevier, vol. 35(C), pages 73-100.
    8. Steinkraus, Arne, 2015. "Coal and Gas - From Cradle to Grave with Carbon Capture and Storage," Economics Department Working Paper Series 14, Technische Universität Braunschweig, Economics Department.
    9. Rehdanz, Katrin & Tol, Richard S.J. & Wetzel, Patrick, 2006. "Ocean carbon sinks and international climate policy," Energy Policy, Elsevier, vol. 34(18), pages 3516-3526, December.
    10. Bandza, Alexander J. & Vajjhala, Shalini P., 2010. "Long-Term Risks and Short-Term Regulations: Modeling the Transition from Enhanced Oil Recovery to Geologic Carbon Sequestration," Discussion Papers dp-08-29-rev, Resources For the Future.
    11. 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).
    12. Duan, Hong-Bo & Fan, Ying & Zhu, Lei, 2013. "What’s the most cost-effective policy of CO2 targeted reduction: An application of aggregated economic technological model with CCS?," Applied Energy, Elsevier, vol. 112(C), pages 866-875.
    13. Teng, Fei & Tondeur, Daniel, 2007. "Efficiency of Carbon storage with leakage: Physical and economical approaches," Energy, Elsevier, vol. 32(4), pages 540-548.
    14. Vajjhala, Shalini & Gode, Jenny & Torvanger, Asbjørn, 2007. "An International Regulatory Framework for Risk Governance of Carbon Capture and Storage," Discussion Papers dp-07-13-rev, Resources For the Future.
    15. 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.
    16. Bob van der Zwaan & Koen Smekens, 2004. "Environmental Externalities of Geological Carbon Sequestration Effects on Energy Scenarios," Working Papers 2004.58, Fondazione Eni Enrico Mattei.

    More about this item

    Keywords

    climate change; energy policy; carbon storage; carbon sequestration; leakage; séquestration du carbone; changement climatique; politique énergétique; stockage du carbone;

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