July - September 1999

Carbon Dioxide Emissions Trading:
Simplifying the Analysis
[Abstract] [References]

Capturing Carbon Dioxide
from Power Plants:
Cost-Effective Carbon Management?
[Abstract] [References]

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Carbon Dioxide Emissions Trading:
Simplifying the Analysis

ne of the hottest topics in recent climate-change negotiations has been emissions trading. Under the Kyoto Protocol, countries that face high costs to reduce emissions of carbon dioxide (CO₂) are allowed to pay countries with lower-cost opportunities to make the reductions for them. An Energy Laboratory team has developed an easy-to-interpret method of showing who would trade and how specific nations would be affected. Using output from standard models that simulate economic growth, energy use, and carbon emissions, the researchers form "marginal abatement curves" that show the cost to a given region of achieving cuts in CO₂ emissions. By superimposing curves for different regions, they can readily see which regions would trade and how their costs would be affected. Analyses show that, almost regardless of circumstances, all regions will benefit from trading. The savings are enormous when the lowest-cost reducers--the developing nations--participate. But costs drop considerably even when trading is limited to the major regions of the Organization for Economic Cooperation and Development (OECD). In every case, nearly all nations benefit some, and nations facing the highest costs benefit most. The researchers are now performing analyses involving different levels of economic and emissions growth and specific rules for trading currently being considered. These analyses show, for instance, that establishing ceilings on how much a nation can trade severely reduces the overall gains from trading.

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Capturing Carbon Dioxide
from Power Plants:
Cost-Effective Carbon Management?

ne way to reduce emissions of greenhouse gases is to capture and permanently store the carbon dioxide (CO₂) emitted by electric power plants burning fossil fuels. However, current methods of capturing CO₂ are expensive; so a critical concern with CO₂ "capture and sequestration" is cost. Energy Laboratory researchers have performed a methodical study of projected costs for capturing CO₂ from three types of power plants, two fueled by coal and one by natural gas. According to their analyses, capturing CO₂ could push up the cost of generating electricity from 3.3¢/kWh to 5.2¢/kWh at a natural gas plant and from 4.6¢/kWh to 6.0¢/kWh at a coal plant based on gasification. At those costs, carbon capture promises to be a less-expensive near-term option for carbon mitigation than switching to solar and perhaps nuclear power. With technological advances expected by 2012, incorporating capture could add less than 1¢/kWh to the cost of electricity. Increasing power plant efficiency could reduce the cost of capture substantially as it would lower both the cost per kWh generated and the amount of CO₂ emissions to be captured. Interestingly, if carbon capture and sequestration are practiced, coal plants may become more competitive with natural gas plants as restrictions on carbon emissions tighten. The researchers are now using MIT's Integrated Global System Model to perform more rigorous analyses of how CO₂ capture compares to other carbon-mitigation options under various assumptions about the future.

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