Microeconomic analysis of investment incentives under emission control

Inhaltsverzeichnis (Table of Contents)

• Abstract
• List of Figures
• List of Tables
• Abbreviations
• 1 Introduction
• Carbon Capture and Storage
• Technologies
• The Post-Combustion Capture Process
• The Pre-Combustion Capture Process
• The Oxy-Fuel Process
• Long-Term Technology Options
• CO2 Transport
• CO2 Storage
• Geologic Storage
• Enhanced Oil Recovery
• Enhanced Gas Recovery
• Enhanced Coal-Bed Methane Recovery
• Ocean Storage
• Mineral Storage
• Monitoring
• Costs
• 3 Innovation Economics
• A Definition of Innovation
• Innovation Behavior and the Structure of Markets
• Cournot meets Bertrand: Innovation and the Nature of Competition
• Failures on the Market for Innovation
• Knowledge Externalities, Technological Spillovers and Patent Protection
• Patenting
• The Impact of Knowledge Spillovers on Innovation
• Adoption of Technologies
• Adoption Externalities
• Innovation under Pollution Control
• The Basics of Weitzman
• The Nature of Electricity and External Effects in Generation
• Incomplete Information
• Innovation and optimal pollution control
• Investment Incentives under Emission Permits
• Investment into Carbon Capture and Storage
• Critical Discussion of the Results
• Patent Race vs. Research Joint Venture under Emission Control
• 4 The Model
• Model Description
• Scenarios
• Base Case Calibration
• Scenario 1 - Changing Input Parameters
• Scenario 2 Permit Reduction
• Scenario 3: Only Nuclear Capacity Replacement
• Scenario 4 - Withdrawal from the Nuclear Energy Program
• Scenario 5 - Learning Effects
• Asymmetric Players
• Scenario 6- Asymmetric Players, no Learning
• Scenario 7 - Asymmetric Players, Learning
• Conclusion
• 5 References

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This thesis explores the economic aspects of investment incentives for carbon capture and storage (CCS) technologies under emission control. The work aims to analyze the market failures surrounding innovation and their interaction with failures in pollution control. It also investigates how CCS adoption and diffusion are affected by factors like policy support, learning effects, and market structure. Key themes explored in the text include:
• Market failures in the context of innovation and pollution control.
• The role of policy support in encouraging investment in CCS technologies.
• The impact of learning effects on the diffusion of CCS technologies.
• The influence of market structure on the adoption of CCS technologies.
• The economic implications of CCS technologies in electricity generation.

Zusammenfassung der Kapitel (Chapter Summaries)

• Chapter 1: Introduction: This chapter provides a comprehensive overview of carbon capture and storage technologies, highlighting the different capture processes, CO2 transport methods, and storage options. The chapter also addresses the importance of CCS in mitigating CO2 emissions, particularly within the energy sector.
• Chapter 2: Innovation Economics: This chapter delves into the theoretical framework of innovation economics, discussing the definition of innovation, innovation behavior in different market structures, and the concept of market failures in innovation. It focuses specifically on knowledge externalities, technological spillovers, and patent protection, exploring how these factors influence the adoption and diffusion of new technologies.
• Chapter 3: The Model: This chapter presents a detailed model that simulates the adoption and diffusion of CCS technologies in a two-player Cournot game. The producers in the model are subject to emission control and can choose among various technologies to comply with these constraints. The analysis explores different scenarios, examining the effects of various factors on the producers' decisions, including emission limits, learning effects, and market structure.

Schlüsselwörter (Keywords)

The core themes and concepts explored in this work center around carbon capture and storage (CCS), innovation economics, market failures, emission control, and electricity generation. The analysis considers factors like policy support, learning effects, market structure, and the economic implications of CCS technologies in a competitive market environment. The research also examines the interaction between innovation and pollution control, highlighting the need for effective policy interventions to encourage the adoption and diffusion of CCS technologies.

Frequently Asked Questions

What is Carbon Capture and Storage (CCS)?

CCS is a technology designed to capture CO2 emissions from large scale sources like power plants and store them underground to prevent them from entering the atmosphere.

How do carbon prices affect investment in CCS?

High carbon prices are required to incentivize CCS because the technology involves significantly higher capital costs and energy losses compared to traditional fossil fuel plants.

What market failures impede the diffusion of CCS?

Failures include knowledge externalities, technological spillovers, and incomplete information, which can prevent companies from investing in innovative green technologies.

What role does policy support play in CCS adoption?

The analysis shows that stringent emission limits, R&D support, and publicly financed demonstration projects are crucial for a successful switch to environmentally friendly technologies.

How do learning effects impact the market?

Learning effects can reduce the long-term costs of CCS, making it more attractive for producers as the technology matures and becomes more efficient.