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CEIC-03-01

"Fossil Electricity and CO2 Sequestration: How Natural Gas Prices, Initial Conditions and Retrofits Determine the Cost of Controlling CO2 Emissions"

Timothy L. Johnson, David W. Keith.

Abstract:
Stabilization of atmospheric greenhouse gas concentrations will require significant cuts in electric sector carbon dioxide (CO2) emissions.
The ability to capture and sequester CO2 in a manner compatible with todayís fossil-fuel based power generation infrastructure offers a potentially low-cost contribution to a larger climate change mitigation strategy. The extent to which carbon capture and sequestration (CCS) technologies might lower the cost of CO2 control in competitive electric markets will depend on how they displace existing generating units in a systemís dispatch order, as well as on their competitiveness with abatement alternatives. This paper assumes a perspective intermediate to the more common macro-economic or plant-level analyses of CCS and employs an electric system dispatch model to examine how natural gas prices, sunk capital, and the availability of coal plant retrofits affect CCS economics. Despite conservative assumptions about cost, CCS units are seen to provide significant reductions in base-load CO2 emissions at a carbon price below 100 $/tC. In addition, the availability to retrofit coal plants for post-combustion CO2 capture is not seen to lower the overall cost of CO2 abatement.

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