Abstract
The economics of CO2 capture and storage in relation to the possibility of leakage of CO2 from geological reservoirs once this greenhouse gas has been stored artificially underground will be among the main determinants of whether CCS can significantly contribute to a deep cut in global CO2 emissions. This paper presents an analysis of the economic and climatic implications of the large-scale use of CCS for reaching a stringent climate change control target, when geological CO2 leakage is accounted for. The natural scientific uncertainties regarding the rates of possible leakage of CO2 from geological reservoirs are likely to remain large for a long time to come. We present a qualitative description, a concise analytical inspection, as well as a more detailed integrated assessment model, proffering insight into the economics of geological CO2 storage and leakage. Our model represents three main CO2 emission reduction options: energy savings, a carbon to non-carbon energy transition and the use of CCS. We find CCS to remain a valuable option even with CO2 leakage of a few percent per year, well above the maximum seepage rates that we think are likely from a geo-scientific point of view.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Bovenberg AL, Smulders SA (1996) Transitional impacts of environmental policy in an endogenous growth model. Int Econ Rev 37:861–893
Buonanno P, Carraro C, Galeotti M (2003) Endogenous induced technical change and the costs of Kyoto. Resource Energy Econ 25:11–34
Chakravorty U, Roumasset J, Tse K (1997) Endogenous substitution among energy resources and global warming. J Politic Econ 105:1201–1234
Deffeyes KS (2005) Beyond oil: the view from Hubbert’s peak. Farrar, Straus & Giroux
Edenhofer O, Lessmann K, Kemfert C, Grubb M, Kohler J (2006) Synthesis report from the innovation modelling comparison project. Special issue on induced technological change and the economics of atmospheric stabilization. Energy J 57–109
Fischer C, Newell R (2004) Environmental and technology policies for climate change and renewable energy. Discussion Paper 04-05 (Rev), Resources for the Future, Washington DC
Gerlagh R, van der Zwaan BCC (2003) Gross world product and consumption in a global warming model with endogenous technological change. Resource Energy Econ 25:35–57
Gerlagh R, van der Zwaan BCC (2004) A sensitivity analysis of timing and costs of greenhouse gas emission reductions under learning effects and niche markets. Climatic Change 65:39–71
Gerlagh R, van der Zwaan BCC (2006) Options and instruments for a deep cut in CO2 emissions: carbon capture or renewables, taxes or subsidies? Energy J 27(3):25–48
Gerlagh R, van der Zwaan BCC, Hofkes MW, Klaassen G (2004) Impacts of CO2-taxes in an economy with niche markets and learning-by-doing. Environ Resource Econ 28:367–394
Goulder LH, Mathai K (2000) Optimal CO2 abatement in the presence of induced technological change. J Environ Econ Manage 39:1–38
Ha-Duong M, Keith DW (2003) Carbon storage: the economic efficiency of storing CO2 in leaky reservoirs. Clean Techn Environ Policy 5:181–189
Hepple RP, Benson SM (2002) Implications of surface seepage on the effectiveness of geologic storage of carbon dioxide as a climate change mitigation strategy. In: Kaya Y, Ohyama K, Gale J, Suzuki Y (eds) GHGT-6: sixth international conference on greenhouse gas control technologies. Kyoto, Japan, 30 September–4 October
Herzog H, Caldeira K, Reilly J (2003) An issue of permanence: assessing the effectiveness of temporary carbon storage. Climatic Change 59:293–310
Hotelling H (1931) The economics of exhaustible resources. J Politic Econ 34:137–175
IEA/OECD (2000) Experience curves for energy technology policy. International Energy Agency, Organisation for Economic Co-operation and Development, Paris, France
IPCC (2001) Special report on emission scenarios. Intergovernmental Panel on Climate Change, Cambridge University Press, Cambridge UK
IPCC (2005) Special Report on Carbon Dioxide Capture and Storage, Intergovernmental Panel on Climate Change, Working Group III, Cambridge University Press, Cambridge UK
Jaccard M, Nyboer J, Bataille C et al (2003) Modeling the cost of climate policy: distinguishing between alternative cost definitions and long-run cost dynamics. Energy J 24:49–73
Keller K, Yang Z, Hall M, Bradford DF (2003) Carbon dioxide sequestration: when and how much? CEPS working paper 94, Princeton University
Kharaka YK, Cole DR, Hovorka SD, Gunter WD, Knauss KG, Freifeld BM (2006) Gas–water–rock interactions in Frio Formation following CO2 injection: implications for the storage of greenhouse gases in sedimentary basins. Geology 34:7
McDonald A, Schrattenholzer L (2001) Learning rates for energy technologies. Energy Policy 29:255–261
Messner S (1997) Endogenized technological learning in an energy systems model. J Evolution Econ 7:291–313
Nakićenović N, et al (2000) Special Report on Emissions Scenarios (SRES), IPCC, Working Group III, Cambridge University Press.
NITG (2007) Netherlands institute of applied geoscience, TNO. www.nitg.tno.nl /eng /projects /6_stor /index.shtml
Nordhaus WD (2002) Modeling induced innovation in climate change policy, Ch. 9. In: Grübler A, Nakiæenoviæ N, Nordhaus WD (eds) Modeling induced innovation in climate change policy. Resources for the Future Press, Washington DC
Nordhaus WD, Boyer J (2000) Warming the world, economic models of global warming. MIT Press, Cambridge, MA
Pacala SW (2002) Global constraints on reservoir leakage. In: Kaya Y, Ohyama K, Gale J, Suzuki Y (eds), GHGT-6: sixth international conference on greenhouse gas control technologies, Kyoto, Japan, 30 September–4 October
Papathanasiou D, Anderson D (2001) Uncertainties in responding to climate change: on the economic value of technology policies for reducing costs and creating options. Energy J 22:79–114
Riahi K, Rubin ES, Taylor MR, Schrattenholzer L, Hounshell DA (2004) Technological learning for carbon capture and sequestration technologies. Energy Econ 26(4):539–564
Rubin ES, Taylor MR, Yeh S, Hounshell DA (2004) Learning curves for environmental technologies and their importance for climate policy analysis. Energy 29:1551–1559
Smekens K, van der Zwaan BCC (2006) Atmospheric and geological CO2 damage costs in energy scenarios. Environ Sci Policy 9:3
Stephens JC, van der Zwaan BCC (2005) The case for carbon capture and storage. Issues in Science and Technology, Fall, 69–76
van der Zwaan BCC (2005) Will coal depart or will it continue to dominate global power production during the 21st century? Climate Policy 5(4):445–453
van der Zwaan BCC, Gerlagh R (2006) Climate sensitivity uncertainty and the necessity to transform global energy supply. Energy 31:2571–2587
van der Zwaan BCC, Gerlagh R (2008) The economics of geological CO2 storage and leakage. FEEM, Nota di Lavoro, Milan
van der Zwaan BCC, Smekens K (2008) CO2 capture and storage with leakage in an energy-climate model. Environ Model Assess (in press)
van der Zwaan BCC, Gerlagh R, Klaassen G, Schrattenholzer L (2002) Endogenous technological change in climate change modeling. Energy Econ 24:1–19
van’t Veld K, Plantinga A (2005) Carbon sequestration or abatement? The effect of rising carbon prices on the optimal portfolio of greenhouse-gas mitigation strategies. J Environ Econ Manage 50:59–81
Wigley TML, Richels RG, Edmonds JA (1996) Economic and environmental choices in the stabilization of atmospheric CO2 concentrations. Nature 379(6562):240–243
Wilson EJ, Johnson TL, Keith DW (2003) “Regulating the Ultimate Sink: Managing the Risks of Geologic CO2 Storage”. Environ Sci Technol 37:16.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
van der Zwaan, B., Gerlagh, R. Economics of geological CO2 storage and leakage. Climatic Change 93, 285–309 (2009). https://doi.org/10.1007/s10584-009-9558-6
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10584-009-9558-6