Carbon capture and storage vs. energy efficiency: Incompatible antagonists or indispensable allies?

Barbara Praetorius and Katja Schumacher, DIW Berlin (German Institute for Economic Research), Department Energy, Transportation and Environment

Keywords

CCS, carbon capture and storage, energy efficiency, coal, lignite, electricity, climate policy, future energy system, SGM, Germany

Abstract

Carbon capture and storage (CCS) promises the low-emissions coal power station. The technology is under development; a number of technological, economic, environmental and safety issues remain to be solved. With regard to possible trajectories towards a sustainable electricity system, CCS raises a number of questions. On the one hand, CCS may prolong the prevailing coal-to-electricity regime and countervail efforts to increase energy efficiency. On the other hand, given the indisputable need to continue using fossil fuels for some time, it may serve as a bridging technology towards a sustainable energy future. Energy efficiency could then be conceptualized as a natural ally of CCS, as it aims at reducing the consumption of energy and thus the amount of CO2 to be captured and stored.

We discuss these issues for the case of Germany. After a survey of the current state of the art of CCS deployment and activities, we use a general equilibrium model to analyze the impact of introducing CCS to the German electricity system with respect to the energy and technology mix, the resulting CO2 emissions and the interaction with energy efficiency measures. The model shows that, under the assumption of a CO2 policy, both energy efficiency and CCS will contribute to climate gas mitigation. A given climate target can be achieved at lower marginal costs when the option of CCS is included in the analysis.. We conclude that, given an appropriate legal and policy framework, CCS and energy efficiency are complementary measures and should both form part of a broad mix of measures required for a successful CO2 mitigation strategy.