Policies to Promote Carbon Capture and Storage Technologies

Asbstract We model the value chain of Carbon Capture and Storage (CCS) by focusing on decisions taken actors involved in either capture, transport or storage CO 2 . Plants emitting are located apart. If these invest carbon capture facilities, captured is transported to terminals, which again received amount a site. Because network effects, we may have three equilibria: one with no CCS, low investments high CCS. In numerical specification model, find that market for CCS be state excess inertia, i.e., even if social cost sufficiently justify investment from point view, not succeed coordinating their efforts reach equilibrium investment. The government should then consider offering economic incentives investments. addition effect, several other imperfections exist, such as power, economics scale environmental externality emissions. identify policy instruments—in correctly set tax—that will correct remaining bring private line first-best levels. Without correction, too many terminals up few plants facilities our reference structure.