STRATEGIC DYNAMIC CLIMATE POLICY: THE ROLE OF CCS

Normal 0 21 false false false TR JA X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Normal Tablo"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:Calibri;} The paper examines the role of carbon capture and storage (CCS) technology first in an exogenous, and then, in an endogenous growth model with environmental constraints. In the first part, we investigate the activity of the CCS systems given an exhaustible resource constraint and limited CO 2 storage capacity under climate stabilization targets. In the second section, we look at the activity of the CCS technology and corresponding research and development (R&D) investments. Our findings indicate that the CCS technology is welfare improving but its level of activity is highly affected by resource and storage constraints. Given the low amount of resources allocated for CCS R&D, it can be considered that learning-by-doing (LbD) is more relevant for the CCS technology. This is because all components of CCS systems exist and are in use today by the fossil fuel extraction and refining industries. Yet, CCS has not been applied at scale to a large and operational commercial fossil fuel power plant, indicating that the technology can significantly benefit from LbD. Uncertainties in the political will towards tax rates, and leakage possibilities of the stored CO 2 are issues that are left for further research.