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The Economic Impacts of Technical Change in Carbon Capture

There is a general consensus in the literature that carbon capture and storage (CCS), a technology that controls CO2 emissions from fossil fuel power plants, figures to be a critical technology to reduce CO2 emissions to CO2 concentration stabilization levels prescribed in the literature. We completed three projects that advance the understanding of how technical change in carbon capture affects both near-future costs of CCS and the economy in the long term. First, we conducted a literature review of near-future capture cost estimates in order to get an idea of how expensive carbon capture will be in the near-future. The literature indicates that pre-combustion capture is the least expensive carbon capture technology because its combustion process best facilitates carbon capture. Second, we explored the limits of incremental technical change in each near-future capture technology using a performance-cost model. The results of the sensitivity analysis showed that pre-combustion capture could be the least expensive capture technology after incremental technical change has occurred. Third, we used an integrated assessment model (IAM) to investigate how rapid incremental and breakthrough technical change in carbon capture could impact the electric energy market, total CO2 abatement cost and CO2 price over time. We modeled breakthrough technical change using data from a paper in the literature that provides cost and performance estimates for a radical carbon capture technology still in the early stages of research and development (R&D) (Baker, Chon, & Keisler, 2009). CCS dominates electricity market share over time given a chemical looping breakthrough.