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Geological CO2 capture and storage (CCS) is among the main near-term contenders for addressing the problem of global climate change. Even in a baseline scenario, with no comprehensive international climate policy, a moderate level of CCS technology is expected to be deployed, given the economic benefits associated with enhanced oil and gas recovery. With stringent climate change control, CCS technologies will probably be installed on an industrial scale. Geologically stored CO2, however, may leak back to the atmosphere, which could render CCS ineffective as climate change reduction option. This article presents a long-term energy scenario study for Europe, in which we assess the significance for climate policy making of leakage of CO2 artificially stored in underground geological formations. A detailed sensitivity analysis is performed for the CO2 leakage rate with the bottom-up energy systems model MARKAL, enriched for this purpose with a large set of CO2 capture technologies (in the power sector, industry, and for the production of hydrogen) and storage options (among which enhanced oil and gas recovery, enhanced coal bed methane recovery, depleted fossil fuel fields, and aquifers). Through a series of model runs, we confirm that a leakage rate of 0.1%/year seems acceptable for CCS to constitute a meaningful climate change mitigation option, whereas one of 1%/year is not. CCS is essentially no option to achieve CO2 emission reductions when the leakage rate is as high as 1%/year, so more reductions need to be achieved through the use of renewables or nuclear power, or in sectors like industry and transport. We calculate that under strict climate control policy, the cumulative captured and geologically stored CO2 by 2100 in the electricity sector, when the leakage rate is 0.1%/year, amounts to about 45,000 MtCO2. Only a little over 10,000 MtCO2 cumulative power-generation-related emissions are captured and stored underground by the end of the century when the leakage rate is 1%/year. Overall marginal CO2 abatement costs increase from a few €/tCO2 today to well over 150 €/tCO2 in 2100, under an atmospheric CO2 concentration constraint of 550 ppmv. Carbon costs in 2100 turn out to be about 40 €/tCO2 higher when the annual leakage rate is 1%/year in comparison to when there is no CO2 leakage. Irrespective of whether CCS deployment is affected by gradual CO2 seepage, the annual welfare loss in Europe induced by the implementation of policies preventing “dangerous anthropogenic interference with the climate system” (under our assumption, implying a climate stabilisation target of 550 ppmv CO2 concentration) remains below 0.5% of GDP during the entire century. [ABSTRACT FROM AUTHOR]

Abstract: Geological carbon dioxide capture and storage (CCS) is currently seriously considered for addressing, in the near term, the problem of climate change. CCS technology is available today and is expected to become an increasingly affordable CO2 abatement alternative. Whereas the rapidly growing scientific literature on CCS as well as experimental and commercial practice demonstrate the technological and economic feasibility of implementing this clean fossil fuel option on a large scale, relatively little attention has been paid so far to the risks and environmental externalities of geological storage of CO2. This paper assesses the effects of including CCS damage costs in a long-term energy scenario analysis for Europe. An external cost sensitivity analysis is performed with a bottom-up energy technology model that accounts not only for CCS technologies but also for their external costs. Our main conclusion is that in a business-as-usual scenario (i.e. without climate change intervention or externality internalisation), CCS technologies are likely to be deployed at least to some extent, mainly in the power generation sector, given the economic benefits of opportunities such as enhanced coal bed methane, oil and gas recovery. Under a strict climate (CO2 emissions) constraint, CCS technologies are deployed massively. With the simultaneous introduction of both CO2 and CCS taxation in the power sector, designed to internalise the external atmospheric and geological effects of CO2 emissions and storage, respectively, we find that CCS will only be developed if the climate change damage costs are at least of the order of 100€/tCO2 or the CO2 storage damage costs not more than a few €/tCO2. When the internalised climate change damage costs are as high as 67€/tCO2, the expensive application of CCS to biomass-fuelled power plants (with negative net CO2 emissions) proves the most effective CCS alternative to reduce CO2 emissions, rather than CCS applied to fossil-based power plants. [Copyright &y& Elsevier]