Economic Modeling of Carbon Capture and Sequestration Technologies

As policy makers consider strategies to reduce greenhouse gas emissions, they need to understand the available options and the conditions under which these options become economically attractive. This paper explores the economics of carbon capture and sequestration technologies as applied to electric generating plants. The MIT Emissions Prediction and Policy Analysis (EPPA) model, a general equilibrium model of the world economy, is used to model two of the most promising carbon capture and sequestration (CCS) technologies. The CCS technologies are based on a natural gas combined cycle plant and an integrated coal gasification combined cycle plant. Additionally, the role of natural gas combined cycle plants without capture and sequestration is modeled to represent a rapidly growing generation technology. These technologies have been fully specified within the EPPA model by production functions and we simulate how they perform under different policy scenarios. The results illustrate how changing input prices and general equilibrium effects influence technology choices between gas and coal capture plants and other technologies for electricity production. Results reflect the application of the technologies to the United States.