Distributional impacts of carbon capture in the US power sector

Varela Varela, Ana ORCID: 0000-0003-1960-5619, Shawhan, Daniel, Funke, Christoph, Domeshek, Maya, Robson, Sally, Witkin, Steven, Burtraw, Dallas and Ünel, Burçin (2024) Distributional impacts of carbon capture in the US power sector. Journal of the Association of Environmental and Resource Economists, 11 (S1). S157 - S197. ISSN 2333-5955

	Text (1_CCUS Power Sector Distributional Impact_final) - Accepted Version Repository staff only until 1 November 2025. Download (2MB)
	Text (3_CCUS Pow Sect Distrib Impacts_final) - Accepted Version Repository staff only until 1 November 2025. Download (2MB)

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Abstract

While some see carbon capture, utilization, and storage (CCUS) as crucial for cost-effective decarbonization, it faces opposition based on air pollution and equity concerns. To understand this cost–air pollution trade-off, we simulate the potential impacts of allowing CCUS deployment in the US power sector under plausible climate policies. We show that the existence of this trade-off critically depends on the underlying policy, which affects the type of generation CCUS could displace: under a policy that incentivizes coal generation, CCUS might improve health outcomes and reduce costs. When we disaggregate our results, we find that the air pollution (PM2.5) effects of allowing CCUS, positive or negative, are largest for Black and low-income populations. We show that allowing CCUS can yield energy-cost savings, particularly benefiting lower-income communities. Our sensitivity analyses highlight the effects of uncertainties on costs and benefits. Overall, this study contributes to our understanding of broader distributional consequences of allowing CCUS.

Item Type:	Article
Additional Information:	© 2024 The Association of Environmental and Resource Economists
Divisions:	Geography & Environment
Subjects:	G Geography. Anthropology. Recreation > GE Environmental Sciences H Social Sciences > HD Industries. Land use. Labor
JEL classification:	D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q2 - Renewable Resources and Conservation > Q20 - General Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q52 - Pollution Control Costs; Distributional Effects; Employment Effects Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy
Date Deposited:	13 Nov 2024 10:03
Last Modified:	18 Nov 2024 15:57
URI:	http://eprints.lse.ac.uk/id/eprint/126047

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