Physical and economic potential of geological CO2 storage in saline aquifers.

Carbon sequestration in sandstone saline reservoirs holds great potential for mitigating climate change, but its storage potential and cost per ton of avoided CO2 emissions are uncertain. We develop a general model to determine the maximum theoretical constraints on both storage potential and injection rate and use it to characterize the economic viability of geosequestration in sandstone saline aquifers. When applied to a representative set of aquifer characteristics, the model yields results that compare favorably with pilot projects currently underway. Over a range of reservoir properties, maximum effective storage peaks at an optimal depth of 1600 m, at which point 0.18-0.31 metric tons can be stored per cubic meter of bulk volume of reservoir. Maximum modeled injection rates predict minima for storage costs in a typical basin in the range of $2-7/ ton CO2 (2005 U.S.$) depending on depth and basin characteristics in our base-case scenario. Because the properties of natural reservoirs in the United States vary substantially, storage costs could in some cases be lower or higher by orders of magnitude. We conclude that available geosequestration capacity exhibits a wide range of technological and economic attractiveness. Like traditional projects in the extractive industries, geosequestration capacity should be exploited starting with the low-cost storage options first then moving gradually up the supply curve.

Balancing Cost and Emissions Certainty: An Allowance Reserve for Cap-and-Trade

On efficiency grounds, the economics community has to date tended to emphasize price-based policies to address climate change - such as taxes or a "safety-valve" price ceiling for cap-and-trade - while environmental advocates have sought a more clear quantitative limit on emissions. This paper presents a simple modification to the idea of a safety valve - a quantitative limit that we call the allowance reserve. Importantly, this idea may bridge the gap between competing interests and potentially improve efficiency relative to tax or other price-based policies. The last point highlights the deficiencies in several previous studies of price and quantity controls for climate change that do not adequately capture the dynamic opportunities within a cap-and-trade system for allowance banking, borrowing, and intertemporal arbitrage in response to unfolding information.