Fossil Fuels without Co2 Emissions: Assessing the Costs of Carbon Dioxide Capture and Sequestration in Us Electricity Markets

The decoupling of fossil-fueled electricity production from atmospheric carbon dioxide emissions via CO2 capture and sequestration (CCS) is increasingly regarded as an important means of mitigating climate change at a reasonable cost. Engineering analyses of CO2 mitigation typically compare the cost of electricity for a base generation technology to that from a similar plant with CO2 capture and then compute the carbon emissions mitigated per unit of cost. It can be hard to interpret mitigation cost estimates from this plant-level approach when a consistent base technology cannot be identified. In addition, neither engineering analyses nor general equilibrium models can capture the economics of plant dispatch. A realistic assessment of the costs of carbon sequestration as an emissions abatement strategy in the electric sector therefore requires a systems-level analysis. We discuss various frameworks for computing mitigation costs and introduce a simplified model of electric sector planning. Results from a “bottom-up” engineeringeconomic analysis for a representative U.S. NERC region illustrate how the penetration of carbon capture and sequestration technologies and the dispatch of generating units vary with the price of carbon emissions, and thereby determine the relationship between mitigation cost and emissions reduction. N.B., This paper has been submitted to the Journal of the Air & Waste Management Association for review as part of the Electric Utilities Environmental Conference (Tucson, AZ; January 2001) proceedings. INTRODUCTION The need to reconcile stabilization of atmospheric carbon dioxide (CO2) with an energy infrastructure dependent on fossil fuels presents a fundamental challenge to industrial society. While the CO2 emissions per unit of electricity generated in the US has decreased by roughly twenty-five percent in the last half century, the amount of power generated has grown eleven-fold and electricity generation is now responsible for one-third of annual US CO2 emissions. Over the next half century substantial reductions in CO2 emissions will likely be needed