The Kyoto Protocol has first set a price on carbon dioxide emission (CO2).The energy sector is, due to its nature, particularly afflicted. The combustion of fossil fuels emits massive amounts of CO2 which need to be covered by means of limited emission permits.
Coal is the fossil fuel which on the one hand is provided with the largest reserves (thus assuring future fuel availability at comparably low costs) but is on the other hand emitting the largest amount of CO2 per MWhel. Therefore, technologies to capture and store that CO2 are under development. Those
technologies come with significantly higher capital cost for the plants and high energy losses in
generation. Consequently, high carbon prices are required to incentivize investment into that innovative technology.
But the adoption and diffusion of innovations is not only a question of financial incentives. As on other markets, the market for innovation is characterized by potential failures which may impede or prevent the successful diffusion of advanced technologies.
The following thesis first provides an overview about the innovative technologies to capture CO2 from large scale sources just reaching demonstration phase.
Second, innovation from an industrial organizational point of view is analyzed. The focus here is set on market failures for innovation, in particular with respect to market failures which interact with failures on the market for pollution control.
Third, a model is introduced which simulates the adoption and diffusion of Carbon Capture and Storage (CCS) in a two player Cournot game. The producers are subject to emission control and can choose among several technologies to comply with that constraint.
The analysis shows that producers prefer a significant reduction in output and profit instead of investing into the expensive technology. The situation changes as nuclear energy production is phased out and learning effects are introduced. This indicates that a switch to environmentally friendly
technologies needs strong policy support by stringent emission limits as well as by R&D support and public financed demonstration projects.
In extreme cases in which one player is initially equipped with a high share of coal while the other is nuclear based, no symmetric market shares develop. Then, despite being subject to a higher level of emission control, the fossil fuel based player dominates the market over a long time.
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
- 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.
- 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.
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:Zusammenfassung der Kapitel (Chapter Summaries)
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.- Citar trabajo
- Johannes Herold (Autor), 2008, Microeconomic analysis of investment incentives under emission control, Múnich, GRIN Verlag, https://www.grin.com/document/129016
