Two mechanisms have been created to support carbon capture and storage (CCS) technologies at the European Union-level – stimulus spending of up to €180 million for one project in selected member states and allocation of up to 45 million EU-ETS allowances (EUAs) per demonstration project from a total pot of 300 million allowances. We identify a number of key risks in designing the project selection process including the carbon price risk, the variable cost risk, technological risk and inefficiencies including asymmetric information and collusion. A Technology Category Auction (TCA) would deliver learning from diversity rather than replication, which is more appropriate for the CCS demonstration phase. To be effective, however, the TCA will require a number of demonstration projects in line with EU objectives of 10-12 plants deployed by 2015.
|Publisher||Department of Energy and Climate Exchange|
|Publication status||Published - 2009|
Newbery, D. M. G., Jamasb, T., Reiner, D., Steinberg, R., Toxvaerd, F., & Noel, P. (2009). Carbon capture and storage (CCS) analysis of incentives and rules in a European repeated game situation. (URN 09D/676 ed.) Department of Energy and Climate Exchange.