Carbon capture and storage (CCS) analysis of incentives and rules in a European repeated game situation

David M. G. Newbery, Tooraj Jamasb, D Reiner, Richard Steinberg, Flavio Toxvaerd, Pierre Noel

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Abstract

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.
Original languageEnglish
PublisherDepartment of Energy and Climate Exchange
EditionURN 09D/676
Publication statusPublished - 2009

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    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.