Optimal Timing of Carbon Capture and Storage Policies - a Social Planner's View

Carbon capture and storage (CCS) is considered one of the most realistic and plausible options for reducing greenhouse gas (GHG) emissions from large pollution sources. However, CCS deployment is costly. This paper considers the social cost of CCS projects and GHG damage from a central planer's point of view, providing clear information about when each player should deploy CCS. The findings are twofold: (1) given the heterogeneity of players, it is not socially optimal for all players to start CCS projects at the same time; instead, the player that has a cost advantage should start first; (2) it may be socially desirable for the player with a cost disadvantage never starts CCS. We show the conditions that support both possibilities. The second finding provides a clear policy guideline for the decision-maker: reduce the costs of the
high-cost player in order to reduce global GHG emissions, provided that is the aim of
the supranational institute.