Development of an Energy Economic Model with Endogenous Technical Progress and Feasibility Study of CCS Systems

Abstract

The main objective of the research is to develop a bottom-up energy-economic model considering endogenous technical progress, and to analyze the potential of CCS introduction among Japan's electricity market in order to find out an optimum carbon reduction scenario into the future. On the basis of two-factor learning curve, both learning-by-doing and R&D functions drive technical progress in the model. The analysis is performed with a set of scenarios based on alternative assumptions for technical progress of carbon capture technologies: chemical absorption and physical absorption. As a result, technical progress decreases generation costs of power technologies with CCS systems resulting in the acceleration of additional CCS introduction. In addition, generation cost with chemical absorption notably decreases due to technical progress, and share of gas-fired power plant in total power generation increases. Thus, carbon emissions reduction reaches around 17% of total carbon emissions in 2050 under projected scenario, however, technical progress has little impact on total systems cost. Technical progress by learning-by-doing has a strong impact on CCS introduction than that of R&D. Moreover, unconsidered factors such as R&D effort in private sectors and spillover may push down possible carbon emissions as well.