Incentives and 99% capture rate: Minimizing post-decision regret in a net-zero power world

Abstract

To hasten power-sector decarbonization, the U.S. Congress legislated changes to the tax code to provide incentives for renewable and zero-carbon capacity expansion and increase existing 45Q incentives for carbon capture and storage (CCS) and direct air capture and storage. We conduct both detailed deterministic and stochastic techno-economic analyses of existing coal-fired electric generating units (CFEGUs) to determine the least-cost solution for a net-zero abate-or-retire-and-replace decision with 17 fungible technologies. Our analysis indicates that CCS capacity at a 99 % capture rate is often economically preferable to renewable and zero-carbon capacity when a 4-hour (or greater) adequacy constraint is imposed. We also show that additional CCS capacity becomes financially viable when the CFEGU economic life matches the incentive duration. Importantly, our analysis indicates that the deployment of 99 % capture rate CCS can decrease the expected post-decision regret and increase the ease of this net-zero decision.