Economic modeling of CO2 capture and sequestration

As policy makers look for strategies to reduce greenhouse gas emissions, they need to understand what options are available and under what conditions these technologies could be economically competitive. This paper explores the economics of carbon capture and sequestration technologies using the MIT Emissions Prediction and Policy Analysis (EPPA) model. We model two of the most promising carbon capture and sequestration technologies, one based on a natural gas combined cycle (NGCC) capture plant and one based on an integrated coal gasification combined cycle (IGCC) capture plant. The technologies have been fully specified within the EPPA model by production functions and we simulate how they perform under different policy scenarios. The results show how changing input prices and general equilibrium effects can influence technology choice between the coal and gas capture plants and other technologies for electricity production.