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Mitigating Climate Change While Producing More Oil: Economic Analysis of Government Support for CCS-EOR

Hossa Almutairi and Axel Pierru

Year: 2024
Volume: Volume 45
Number: Special Issue
DOI: 10.5547/01956574.44.SI1.halm
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Abstract:
By storing CO2 captured from the atmosphere or point sources into oil fields, carbon capture and storage with enhanced oil recovery (CCS-EOR) increases the fields' output by raising reservoir pressures. Since CO2-EOR has been experimented with for decades and the revenues from the additional oil production improve projects' economics, CCS-EOR is the most readily deployable CCS technology. However, government support for CCS-EOR projects is sometimes contested on the grounds that the resulting increase in oil production undermines their environmental benefits. Addressing this concern requires determining the effects of implementing CCS-EOR on global CO2 emissions. This paper presents a simple approach based on a marginal reasoning consistent with economic decision-making. It produces analytical formulas that account for the effects on the global oil market of incentivizing CCS-EOR. In addition, we quantify the volume of oil that can be decarbonized by storing a ton of captured CO2 through EOR from different perspectives. We produce numerical results based on a first-cut calibration. They suggest that, from an economic perspective, CCS-EOR is a technology that mitigates global emissions. However, after accounting for the need to decarbonize the EOR oil, the reduction in emissions is significantly less than the stored quantity of CO2. If fully allocated to oil production, the environmental benefits of capturing a ton of CO2 and storing it through conventional EOR can allow the oil producer to decarbonize 3.4 barrels on a well-to-wheel basis and 14.4 barrels when offsetting its oil-upstream emissions only. Fiscal incentives granted by governments to support CCS-EOR as a climate-change mitigation technology should be sized accordingly. We compare our findings to the size of the subsidy in the revised Section 45Q of the 2022 United States Inflation Reduction Act.



Which Way to Choose? A Generic Modular Life Cycle Assessment for Hydrogen Production and Import Pathways to Germany

Christina Kockel, Jakob Kulawik, David Wohlleben, and Aaron Praktiknjo

Year: 2024
Volume: Volume 45
Number: Special Issue
DOI:
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Abstract:
Hydrogen is set to become a cornerstone of global low-carbon energy systems globally. This study uses Germany as a case study to examine various hydrogen production and import pathways, with a focus on their Global Warming Potential (GWP). Employing a modular life cycle assessment, we identify and evaluate the primary environmental drivers across these pathways, which include production, conversion, transportation, and reconversion stages. Our findings highlight the significance of the electricity source for hydrogen production and conversion, as well as the efficiency of subsequent processes, including carbon capture rates for blue hydrogen, as critical factors influencing GWP. The necessity for hydrogen imports in countries with high demand and limited domestic production underscores the importance of optimizing hydrogen supply chains for reduced CO2 emissions. This analysis offers valuable insights for advancing sustainable energy transitions in other high-demand regions as well.





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