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Discussion Papers no. 595

Effects on energy prices and market shares in power market

Subsidising carbon capture

This paper examines how ambitious climate policies and subsidies to carbon capture may affect international energy prices and market shares in the power market. A detailed numerical model of the international energy markets is used. We first conclude that an ambitious climate policy alone will have substantial effects in the power market, with considerable growth in renewable power production and eventually use of carbon capture. Gas power production will also benefit from such a policy. Subsidising carbon capture and storage (CCS) will significantly accelerate the use of this technology. Nevertheless, total production of coal and gas power (with or without CCS) is only marginally increased, as the subsidy mainly leads to installation of CCS equipment on existing plants, reducing the efficiency from these plants. Consequently, electricity prices are almost unchanged, and the substantial growth in renewable power production is hardly affected by the subsidies to CCS.

Om publikasjonen

Tittel

Subsidising carbon capture. Effects on energy prices and market shares in power market

Ansvarlige

Finn Roar Aune, Gang Liu, Eirik Lund Sagen, Knut Einar Rosendahl

Serie og -nummer

Discussion Papers no. 595

Utgiver

Statistics Norway

Emne

Discussion Papers

Antall sider

27

Målform

Engelsk

Om Discussion Papers

Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.

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