IDEAS home Printed from https://ideas.repec.org/p/ssb/dispap/595.html
   My bibliography  Save this paper

Subsidising carbon capture. Effects on energy prices and market shares in the power market

Author

Listed:

Abstract

This paper examines how ambitious climate policies and subsidies to carbon capture may affect international energy prices and market shares in the power market. A detailed numerical model of the international energy markets is used. We first conclude that an ambitious climate policy alone will have substantial effects in the power market, with considerable growth in renewable power production and eventually use of carbon capture. Gas power production will also benefit from such a policy. Subsidising carbon capture and storage (CCS) will significantly accelerate the use of this technology. Nevertheless, total production of coal and gas power (with or without CCS) is only marginally increased, as the subsidy mainly leads to installation of CCS equipment on existing plants, reducing the efficiency from these plants. Consequently, electricity prices are almost unchanged, and the substantial growth in renewable power production is hardly affected by the subsidies to CCS.

Suggested Citation

  • Finn Roar Aune & Gang Liu & Knut Einar Rosendahl & Eirik Lund Sagen, 2009. "Subsidising carbon capture. Effects on energy prices and market shares in the power market," Discussion Papers 595, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:595
    as

    Download full text from publisher

    File URL: https://www.ssb.no/a/publikasjoner/pdf/DP/dp595.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Reyer Gerlagh & Bob van der Zwaan, 2006. "Options and Instruments for a Deep Cut in CO2 Emissions: Carbon Dioxide Capture or Renewables, Taxes or Subsidies?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 25-48.
    2. Newell, Richard G. & Jaffe, Adam B. & Stavins, Robert N., 2006. "The effects of economic and policy incentives on carbon mitigation technologies," Energy Economics, Elsevier, vol. 28(5-6), pages 563-578, November.
    3. Riahi, Keywan & Rubin, Edward S. & Taylor, Margaret R. & Schrattenholzer, Leo & Hounshell, David, 2004. "Technological learning for carbon capture and sequestration technologies," Energy Economics, Elsevier, vol. 26(4), pages 539-564, July.
    4. McFarland, J. R. & Reilly, J. M. & Herzog, H. J., 2004. "Representing energy technologies in top-down economic models using bottom-up information," Energy Economics, Elsevier, vol. 26(4), pages 685-707, July.
    5. Hart, Rob, 2008. "The timing of taxes on CO2 emissions when technological change is endogenous," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 194-212, March.
    6. Finn Roar Aune, Knut Einar Rosendahl and Eirik Lund Sagen, 2009. "Globalisation of Natural Gas Markets - Effects on Prices and Trade Patterns," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 39-54.
    7. Knut Einar Rosendahl & Eirik Lund Sagen, 2009. "The Global Natural Gas Market: Will Transport Cost Reductions Lead to Lower Prices?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 17-40.
    8. Johnson, Timothy L. & Keith, David W., 2004. "Fossil electricity and CO2 sequestration: how natural gas prices, initial conditions and retrofits determine the cost of controlling CO2 emissions," Energy Policy, Elsevier, vol. 32(3), pages 367-382, February.
    9. Finn Roar Aune & Rolf Golombek & Sverre A.C. Kittelsen & Knut Einar Rosendahl, 2008. "Liberalizing European Energy Markets," Books, Edward Elgar Publishing, number 3071, April.
    10. Martinsen, Dag & Linssen, Jochen & Markewitz, Peter & Vogele, Stefan, 2007. "CCS: A future CO2 mitigation option for Germany?--A bottom-up approach," Energy Policy, Elsevier, vol. 35(4), pages 2110-2120, April.
    11. Finn Roar Aune & Solveig Glomsrød & Lars Lindholt & Knut Einar Rosendahl, 2005. "Are high oil prices profitable for OPEC in the long run?," Discussion Papers 416, Statistics Norway, Research Department.
    12. Michael Grubb, Carlo Carraro and John Schellnhuber, 2006. "Technological Change for Atmospheric Stabilization: Introductory Overview to the Innovation Modeling Comparison Project," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 1-16.
    13. Greaker, Mads & Rosendahl, Knut Einar, 2008. "Environmental policy with upstream pollution abatement technology firms," Journal of Environmental Economics and Management, Elsevier, vol. 56(3), pages 246-259, November.
    14. Kverndokk, Snorre & Rosendahl, Knut Einar, 2007. "Climate policies and learning by doing: Impacts and timing of technology subsidies," Resource and Energy Economics, Elsevier, vol. 29(1), pages 58-82, January.
    15. Requate, Till & Unold, Wolfram, 2003. "Environmental policy incentives to adopt advanced abatement technology:: Will the true ranking please stand up?," European Economic Review, Elsevier, vol. 47(1), pages 125-146, February.
    16. Rubin, Edward S. & Chen, Chao & Rao, Anand B., 2007. "Cost and performance of fossil fuel power plants with CO2 capture and storage," Energy Policy, Elsevier, vol. 35(9), pages 4444-4454, September.
    17. de Vries, Bert J.M. & van Vuuren, Detlef P. & Hoogwijk, Monique M., 2007. "Renewable energy sources: Their global potential for the first-half of the 21st century at a global level: An integrated approach," Energy Policy, Elsevier, vol. 35(4), pages 2590-2610, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chong, Fah Keen & Lawrence‎, Kelvin Kuhanraj & Lim, Pek Peng & Poon, Marcus Chinn Yoong & Foo, Dominic Chwan Yee & Lam, Hon Loong & Tan, Raymond R., 2014. "Planning of carbon capture storage deployment using process graph approach," Energy, Elsevier, vol. 76(C), pages 641-651.
    2. Steven A. Gabriel & Arild Moe & Knut Einar Rosendahl & Marina Tsygankova, 2013. "The likelihood and potential implications of a natural gas cartel," Chapters,in: Handbook on Energy and Climate Change, chapter 3, pages 86-102 Edward Elgar Publishing.

    More about this item

    Keywords

    Energy markets; Climate policy; Carbon capture;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ssb:dispap:595. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (L Maasø). General contact details of provider: http://edirc.repec.org/data/ssbgvno.html .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.