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- ItemThe role of capital costs in decarbonizing the electricity sector(Bristol : IOP Publ., 2016) Hirth, Lion; Steckel, Jan ChristophLow-carbon electricity generation, i.e. renewable energy, nuclear power and carbon capture and storage, is more capital intensive than electricity generation through carbon emitting fossil fuel power stations. High capital costs, expressed as high weighted average cost of capital (WACC), thus tend to encourage the use of fossil fuels. To achieve the same degree of decarbonization, countries with high capital costs therefore need to impose a higher price on carbon emissions than countries with low capital costs. This is particularly relevant for developing and emerging economies, where capital costs tend to be higher than in rich countries. In this paper we quantitatively evaluate how high capital costs impact the transformation of the energy system under climate policy, applying a numerical techno-economic model of the power system. We find that high capital costs can significantly reduce the effectiveness of carbon prices: if carbon emissions are priced at USD 50 per ton and the WACC is 3%, the cost-optimal electricity mix comprises 40% renewable energy. At the same carbon price and a WACC of 15%, the cost-optimal mix comprises almost no renewable energy. At 15% WACC, there is no significant emission mitigation with carbon pricing up to USD 50 per ton, but at 3% WACC and the same carbon price, emissions are reduced by almost half. These results have implications for climate policy; carbon pricing might need to be combined with policies to reduce capital costs of low-carbon options in order to decarbonize power systems.
- ItemNegative emissions—Part 2: Costs, potentials and side effects(Bristol : IOP Publ., 2018) Fuss, Sabine; Lamb, William F.; Callaghan, Max W.; Hilaire, Jérôme; Creutzig, Felix; Amann, Thorben; Beringer, Tim; de Oliveira Garcia, Wagner; Hartmann, Jens; Khanna, Tarun; Luderer, Gunnar; Nemet, Gregory F.; Rogelj, Joeri; Smith, Pete; Vicente Vicente, José Luis; Wilcox, Jennifer; del Mar Zamora Dominguez, Maria; Minx, Jan C.The most recent IPCC assessment has shown an important role for negative emissions technologies (NETs) in limiting global warming to 2 °C cost-effectively. However, a bottom-up, systematic, reproducible, and transparent literature assessment of the different options to remove CO2 from the atmosphere is currently missing. In part 1 of this three-part review on NETs, we assemble a comprehensive set of the relevant literature so far published, focusing on seven technologies: bioenergy with carbon capture and storage (BECCS), afforestation and reforestation, direct air carbon capture and storage (DACCS), enhanced weathering, ocean fertilisation, biochar, and soil carbon sequestration. In this part, part 2 of the review, we present estimates of costs, potentials, and side-effects for these technologies, and qualify them with the authors' assessment. Part 3 reviews the innovation and scaling challenges that must be addressed to realise NETs deployment as a viable climate mitigation strategy. Based on a systematic review of the literature, our best estimates for sustainable global NET potentials in 2050 are 0.5–3.6 GtCO2 yr−1 for afforestation and reforestation, 0.5–5 GtCO2 yr−1 for BECCS, 0.5–2 GtCO2 yr−1 for biochar, 2–4 GtCO2 yr−1 for enhanced weathering, 0.5–5 GtCO2 yr−1 for DACCS, and up to 5 GtCO2 yr−1 for soil carbon sequestration. Costs vary widely across the technologies, as do their permanency and cumulative potentials beyond 2050. It is unlikely that a single NET will be able to sustainably meet the rates of carbon uptake described in integrated assessment pathways consistent with 1.5 °C of global warming.