Promoting CCS in Europe: A Case for Green Strategic Trade Policy?

According to IEA (2018), there is a huge gap between the first-best social optimal utilization of Carbon Capture and Storage (CCS) technologies to lower global CO2 emissions and the current, negligible diffusion of this technology. This calls for a financial support mechanism for CCS. We study to wh...

Full description

Saved in:
Bibliographic Details
Published in:The Energy journal (Cambridge, Mass.) Mass.), 2022-11, Vol.43 (6), p.71-102
Main Authors: Aune, Finn Roar, Gaure, Simen, Golombek, Rolf, Greaker, Mads, Kittelsen, Sverre A.C., Ma, Lin
Format: Article
Language:English
Subjects:
Air quality management
Carbon dioxide
Carbon dioxide emissions
Carbon sequestration
Coal
Commercial policy
Diffusion
Economic aspects
Economic development
Economic models
Electricity
Energy industry
Environmental aspects
Financial support
Industrial plant emissions
International economic relations
Markets
Power
Power plants
Storage
Subsidies
Suppliers
Technology
Trade policy
Upstream
Value chain
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:According to IEA (2018), there is a huge gap between the first-best social optimal utilization of Carbon Capture and Storage (CCS) technologies to lower global CO2 emissions and the current, negligible diffusion of this technology. This calls for a financial support mechanism for CCS. We study to what extent promotion of CCS in Europe should be through subsidizing development and production of CCS technologies—an upstream subsidy—or by subsidising the purchasers of CCS technologies—a downstream subsidy. This question is examined theoretically in a stylized model and numerically by using a new approach that integrates strategic trade policy with an economic model of the European energy markets. The theory model suggests that upstream subsidies should clearly be preferred, and this is confirmed by the numerical simulations. For the European power market, the numerical simulations suggest that subsidies to CCS coal power should exceed subsidies to CCS gas power.
ISSN:0195-6574
1944-9089
DOI:10.5547/01956574.43.6.faun