Abstract
Carbon dioxide (CO2) sequestration has been proposed as a key component in technological portfolios for managing anthropogenic climate change, since it may provide a faster and cheaper route to significant reductions in atmospheric CO2 concentrations than abating CO2 production. However, CO2 sequestration is not a perfect substitute for CO2 abatement because CO2 may leak back into the atmosphere (thus imposing future climate change impacts) and because CO2 sequestration requires energy (thus producing more CO2 and depleting fossil fuel resources earlier). Here we use analytical and numerical models to assess the economic efficiency of CO2 sequestration and analyze the optimal timing and extent of CO2 sequestration. The economic efficiency factor of CO2 sequestration can be expressed as the ratio of the marginal net benefits of sequestering CO2 and avoiding CO2 emissions. We derive an analytical solution for this efficiency factor for a simplified case in which we account for CO2 leakage, discounting, the additional fossil fuel requirement of CO2 sequestration, and the growth rate of carbon taxes. In this analytical model, the economic efficiency of CO2 sequestration decreases as the CO2 tax growth rate, leakage rates and energy requirements for CO2 sequestration increase. Increasing discount rates increases the economic efficiency factor. In this simple model, short-term sequestration methods, such as afforestation, can even have negative economic efficiencies. We use a more realistic integrated-assessment model to additionally account for potentially important effects such as learning-by-doing and socio-economic inertia on optimal strategies. We measure the economic efficiency of CO2 sequestration by the ratio of the marginal costs of CO2 sequestration and CO2 abatement along optimal trajectories. We show that the positive impacts of investments in CO2 sequestration through the reduction of future marginal CO2 sequestration costs and the alleviation of future inertia constraints can initially exceed the marginal sequestration costs. As a result, the economic efficiencies of CO2 sequestration can exceed 100% and an optimal strategy will subsidize CO2 sequestration that is initially more expensive than CO2 abatement. The potential economic value of a feasible and acceptable CO2 sequestration technology is equivalent – in the adopted utilitarian model – to a one-time investment of several percent of present gross world product. It is optimal in the chosen economic framework to sequester substantial CO2 quantities into reservoirs with small or zero leakage, given published estimates of marginal costs and climate change impacts. The optimal CO2 trajectories in the case of sequestration from air can approach the pre-industrial level, constituting geoengineering. Our analysis is silent on important questions (e.g., the effects of model and parametric uncertainty, the potential learning about these uncertainties, or ethical dimension of such geoengineering strategies), which need to be addressed before our findings can be translated into policy-relevant recommendations.
Similar content being viewed by others
References
Adam D (2001) Royal society disputes value of carbon sinks. Nature 412:108
Adger N, Aggarwal P, Agrawala S, Alcamo J, Allali A, Anisimov O, Arnell N, Boko M, Canziani O, Carter T, Casassa G, Confalonieri U, Cruz RV, Alcaraz EdA, Easterling W, Field C, Fischlin A, Fitzharris BB, García CG, Hanson C, Harasawa H, Hennessy K, Huq S, Jones R, Bogataj LK, Karoly D, Klein R, Kundzewicz Z, Lal M, Lasco R, Love G, Lu X, Magrín GJ, Mata L, McLean R, Menne B, Midgley G, Mimura N, Mirza MQ, Moreno J, Mortsch L, Niang-Diop I, Nicholls R, Nováky B, Nurse L, Nyong A, Oppenheimer M, Palutikof J, Parry M, Patwardhan A, Lankao PR, Rosenzweig C, Schneider S, Semenov S, Smith J, Stone J, Ypersele J-Pv, Vaughan D, Vogel C, Wilbanks T, Wong PP, Wu S, Yohe G (2007) Climate change 2007: impacts, adaptation and vulnerability, summary for policymakers, IPCC Secretariat, c/o WMO, 7bis, Avenue de la Paix, C.P. N° 2300, 1211 Geneva 2, Switzerland
Alley R, Berntsen T, Bindoff NL, Chen Z, Chidthaisong A, Friedlingstein P, Gregory J, Hegerl G, Heimann M, Hewitson B, Hoskins B, Joos F, Jouzel J, Kattsov V, Lohmann U, Manning M, Matsuno T, Molina M, Nicholls N, Overpeck J, Qin D, Raga G, Ramaswamy V, Ren J, Rusticucci M, Solomon S, Somerville R, Stocker TF, Stott P, Stouffer RJ, Whetton P, Wood RA, Wratt D (2007) Climate change 2007: the physical science basis, summary for policymakers. IPCC Secretariat, c/o WMO, 7bis, Avenue de la Paix, C.P. N° 2300, 1211 Geneva 2, Switzerland
Argote L, Epple D (1990) Learning curves in manufacturing. Science 247:920–924
Arrow K (1962) The economic implications of learning by doing. Rev Econ Stud 29:155–173
Barker T, Bashmakov I, Bernstein L, Bogner J, Bosch P, Dave R, Davidson O, Fisher B, Grubb M, Gupta S, Halsnaes K, Heij B, Ribeiro SK, Kobayashi S, Levine M, Martino D, Cerutti OM, Metz B, Meyer L, Nabuurs G-J, Najam A, Nakicenovic N, Rogner HH, Roy J, Sathaye J, Schock R, Shukla P, Sims R, Smith P, Swart R, Tirpak D, Urge-Vorsatz D, Dadi Z (2007) IPCC, 2007. Climate change 2007: Mitigation. Contribution of Working group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, Summary for Policymakers’, IPCC Secretariat, c/o WMO, 7bis, Avenue de la Paix, C.P. N° 2300, 1211 Geneva 2, Switzerland
Benitez PC, McCallum I, Obersteiner M, Yamagata Y (2007) Global potential for carbon sequestration: Geographical distribution, country risk and policy implications. Ecol Econ 60:572–583
Chiesa P, Consonni S (2000) Natural gas fired combined cycles with low CO2 emissions. J Eng Gas Turbines Power-Transactions of the Asme 122:429–436
Clarke L, Weyant J, Birky A (2006) On the sources of technological change: assessing the evidence. Energy Econ 28:579–595
Costa PM, Wilson C (2000) An equivalence factor between CO2 avoided emissions and sequestration - description and applications in forestry. Mitig Adapt Strategies Global Change 5:51–60
Craig PP, Gadgil A, Koomey JG (2002) What can history teach us? A retrospective examination of long-term energy forecasts for the United States. Annu Rev Energy Environ 27:83–118
Elliott S, Lackner KS, Ziock HJ, Dubey MK, Hanson HP, Barr S, Ciszkowski NA, Blake DR (2001) Compensation of atmospheric CO2 buildup through engineered chemical sinkage. Geophys Res Lett 28:1235–1238
Fearnside PM, Lashof DA, Costa PM (2000) Accounting for time in mitigating global warming through land-use change and forestry. Mitig Adapt Strategies Global Change 5:239–270
Freund P, Adegbulugbe A, Christophersen Ø, Ishitani H, Moomaw W, Moreira J (2005) Introduction. In: Jochem CE (ed) IPCC special report on carbon dioxide capture and storage. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, pp 21–23
Gerdemann SJ, O’Connor WK, Dahlin DC, Penner LR, Rush H (2007) Ex situ aqueous mineral carbonation. Environ Sci Technol 41:2587–2593
Gerlagh R (2006) ITC in a global growth-climate model with CCS: The value of induced technical change for climate stabilization. Energy J 223–240
Grübler A, Nakicenovic N, Victor DG (1999) Dynamics of energy technologies and global change. Energy Policy 27:247–280
Herzog H, Caldeira K, Reilly J (2003) An issue of permanence: assessing the effectiveness of temporary carbon storage. Clim Change 59:293–310
Herzog H, Smekens K, Dadhich P, Dooley J, Fujii Y, Hohmeyer O, Riahi K, Akai M, Hendriks C, Lackner K, Rana A, Rubin E, Schrattenholzer L, Senior B (2005) Cost and economic potential. In: Christensen J, Tosen G (eds) IPCC special report on carbon dioxide capture and storage. Prepared by Working Group III of the Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, pp 21–56
House KZ, Schrag DP, Harvey CF, Lackner KS (2006) Permanent carbon dioxide storage in deep-sea sediments. Proc Natl Acad Sci U S A 103:12291–12295
Joos F, Mueller-Fuerstenberger G, Stephan G (1999) Correcting the carbon cycle representation: How important is it for the economics of climate change? Environ Model Assess 4:133–140
Keith DW (2000) Geoengineering the climate: History and prospect. Annu Rev Energy Environ 25:245–284
Keith DW, Ha-Duong M, Stolaroff JK (2006) Climate strategy with CO2 capture from the air. Climatic Change 74:17–45
Keller K, Hall M, Kim S-R, Bradford DF, Oppenheimer M (2005) Avoiding dangerous anthropogenic interference with the climate system. Climatic Change 73:227–238
Keller K, Miltich LI, Robinson A, Tol RSJ (2007) How overconfident are current projections of carbon dioxide emissions? Working Paper Series, Research Unit Sustainability and Global Change, Hamburg University. FNU-124, http://ideas.repec.org/s/sgc/wpaper.html
Kverndokk S, Rosendah KE (2007) Climate policies and learning by doing: Impacts and timing of technology subsidies. Resour Energy Econ 29:58–82
Lackner KS (2003) A guide to CO2 sequestration. Science 300:1677–1678
Lackner KS, Ziock HJ, Grimes P (1999) The case for carbon dioxide extraction from the air. Source Book 57:6–10
Lempert RJ, Schlesinger ME, Bankes SC, Andronova NG (2000) The impacts of climate variability on near-term policy choices and the value of information. Climatic Change 45:129–161
Manne AS, Barreto L (2004) Learn-by-doing and carbon dioxide abatement. Energy Economics 26:621–633
Manne AS, Richels RG (1991) Buying greenhouse insurance. Energy Policy 19:543–552
Manne A, Mendelsohn R, Richels R (1995) A model for evaluating regional and global effects of GHG reduction policies. Energy Policy 23:17–34
Marchetti C (1977) Geo-Engineering and CO2 Problem. Climatic Change 1:59–68
McDonald A, Schrattenholzer L (2001) Learning rates for energy technologies. Energy Policy 29:255–261
McInerney D, Keller K (2007) Economically optimal risk reduction strategies in the face of uncertain climate thresholds. Climatic Change DOI 10.1007/s10584–006–9137-z, published online on 16 January 2007
Messner S (1997) Endogenized technological learning in an energy systems model. J Evol Econ 7:291–313
Nemet GF (2006) Beyond the learning curve: factors influencing cost reductions in photovoltaics. Energy Policy 34:3218–3232
Nilsson S, Schopehauser W (1995) The carbon-sequestration potential of the global afforestation program. Climatic Change 30:267–293
Nordhaus WD (1992) An optimal transition path for controlling greenhouse gases. Science 258:1315–1319
Nordhaus WD (2007) The Challenge of Global Warming: Economic Models and Environmental Policy, http://www.econ.yale.edu/∼nordhaus/DICEGAMS/DICE2007.htm, accessed May 2, 2007, model version: DICE-2007.delta.v7
Ramsey F (1928) A mathematical theory of saving. Econ J 37:543–559
Rhodes JS, Keith DW (2005) Engineering economic analysis of biomass IGCC with carbon capture and storage. Biomass Bioenergy 29:440–450
Riahi K, Rubin ES, Schrattenholzer L (2004) Prospects for carbon capture and sequestration technologies assuming their technological learning. Energy 29:1309–1318
Richards KR (1997) The time value of carbon in bottom-up studies. Crit Rev Environ Sci Technol 27:279–292
Rogner HH (1997) An assessment of world hydrocarbon resources. Annu Rev Energy Environ 22:217–262
Rubin E, Meyer L, Coninck h.d., Abanades JC, Akai M, Benson S, Caldeira K, Cook P, Davidson O, Doctor R, Dooley J, Freund P, Gale J, Heidug W, Herzog H, Keith D, Mazzotti M, Metz B, Osman-Elasha B, Palmer A, Pipatti R, Smekens K, Soltanieh M, Thambimuthu K, Zwaan B.v.d. (2005) Carbon Dioxide Capture and Storage: Technical Summary. In: Gizouli IE (ed) IPCC Special Report on Carbon Dioxide Capture and Storage. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, p 442
Schneider SH, Thompson SL (1981) Atmospheric CO2 and climate—importance of the transient-response. J Geophys Res-Oceans and Atmospheres 86:3135–3147
Schulz PA, Kasting JF (1997) Optimal reduction in CO2 emissions. Energy Policy 25:491–500
Schwoon M, Tol RSJ (2006) Optimal CO2-abatement with socio-economic inertia and induced technological change. Energy J 27:25–59
Sohngen B, Sedjo R (2006) Carbon sequestration in global forests under different carbon price regimes. Energy J 109–126
Storn R, Price K (1997) Differential evolution—a simple and efficient heuristic for global optimization over continuous spaces. J Glob Optim 11:341–359
Swinehart SC (1996) Afforestation as a method of carbon sequestration: A cost benefit analysis
Thambimuthu K, Soltanieh M, Abanades JC, Allam R, Bolland O, Davison J, Feron P, Goede F, Herrera A, Iijima M, Jansen D, Leites I, Mathieu P, Rubin E, Simbeck D, Warmuzinski K, Wilkinson M, Williams R, Jaschik M, Lyngfelt A, Span R, Tanczyk M (2005) Carbon Dioxide Capture and Storage: Capture of CO2. In: Abu-Ghararah Z, Yashima T (eds) IPCC Special Report on Carbon Dioxide Capture and Storage. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, p 442
Tol RSJ (1997) On the optimal control of carbon dioxide emissions: An application of FUND. Environ Model Assess 2:151–163
van Kooten GC, Grainger A, Ley E, Marland G, Solberg B (1997) Conceptual issues related to carbon sequestration: Uncertainty and time. Crit Rev Environ Sci Technol 27:65–82
Ward FA (1979) The net social benefits from a research-induced cost-reduction of an energy backstop technology. Am J Agric Econ 61:668–675
Wing IS (2006) Representing induced technological change in models for climate policy analysis. Energy Econ 28:539–562
Yohe GW, Andronova NG, Schlesinger M (2004) To hedge or not to hedge against an uncertain future climate. Science 306:416–417
Author information
Authors and Affiliations
Corresponding author
Additional information
David F. Bradford: deceased.
Rights and permissions
About this article
Cite this article
Keller, K., McInerney, D. & Bradford, D.F. Carbon dioxide sequestration: how much and when?. Climatic Change 88, 267–291 (2008). https://doi.org/10.1007/s10584-008-9417-x
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10584-008-9417-x