Rethinking CCS Developing quantitative tools for analyzing investments in CCS

Lack of climate policy and CO2 markets along with a global economic slowdown suggest that we need to rethink our approach to demonstrating CCS at a commercial scale. Austerity measures make it likely that public funding will be tight in coming years, and there is a striking need to ensure that limited funds are spent optimally. Quantitative tools exist for aiding decision making under uncertainty, yet few of them have been applied to build a model that can help answer the question of what is the optimal allocation of a given amount of money across a portfolio of demonstration projects that maximizes learning about CCS. Developing such a model is the goal of this paper and we employ the model to assess the proper role of Enhanced Oil Recovery ((EOR) in a CCS demonstration portfolio. We find that if we want to maximize learning, a CCUS-only (CCS + EOR) approach to developing CCS as a mitigation technology would only be advisable if there was little uncertainty in non-EOR storage. As we believe that this condition is unlikely to be true, we suggest that U.S. policy makers should be particularly cautious in relying on a CCUS-only approach to CCS development. Nonetheless, we also find that a portfolio consisting of a mix of CCS and CCUS projects can be an effective strategy in a number of situations, notably if EOR can teach us important lessons about non-EOR storage.