Week 11
Valuing Climate and Human Welfare: SCC, VSL, and Policy Responses
In Week 11, we will continue our discussion on the Social Cost of Carbon (SCC) and then move on to explore the Value of Statistical Life (VSL) as well as key policies and regulations designed to address climate change challenges.
βοΈ Classwork
- Classwork 9: Dynamic Efficiency, Discounting, and the SCC
π View Classwork
π Recommended Reading
- Social Cost of Carbon 101, Resources for the Future, March 13, 2025
π§ͺ References for Carbon Capture, Utilization, and Storage (CCUS)
CCUS is one of the most relevant clean technologies to address climate change β
but it comes with important caveats.
It is not a panacea and must be part of a broader portfolio of solutions.
π Why CCUS Is Highly Relevant
- Captures COβ from hard-to-abate sectors
- Targets industrial sources (cement, steel, chemicals) where emissions are process-based, not just from fuel.
- Supported by the International Energy Agency (IEA) and Center for Climate and Energy Solutions (C2ES) as essential for net-zero pathways.
- IEA: CCUS Overview
- Targets industrial sources (cement, steel, chemicals) where emissions are process-based, not just from fuel.
- Enables both mitigation and removal
- Can capture current emissions and enable negative emissions (e.g., BECCS (Bioenergy with Carbon Capture and Storage), DACCS (Direct Air Carbon Capture and Storage)).
- Addresses both the flow and stock of COβ externalities.
- Can capture current emissions and enable negative emissions (e.g., BECCS (Bioenergy with Carbon Capture and Storage), DACCS (Direct Air Carbon Capture and Storage)).
- Large-scale potential
- Featured in nearly all 1.5 Β°C / 2 Β°C scenarios.
- Over 30 commercial-scale projects are already operating globally.
- C2ES: Carbon Capture
- Featured in nearly all 1.5 Β°C / 2 Β°C scenarios.
- Complementary to other clean technologies
- Supports decarbonization where electrification is difficult.
- Works best alongside renewables, not instead of them.
- Supports decarbonization where electrification is difficult.
βοΈ Where CCUS Adds the Most Value
- Heavy industries: cement, steel, fertilizer, chemical plants.
- Existing fossil infrastructure: retrofits reduce emissions during transition.
- Regions with storage potential: saline aquifers, depleted reservoirs.
- Negative-emissions systems: BECCS and DACCS integration.
β οΈ Limitations and Caveats
- High cost and energy penalty
- Capture and compression are expensive and energy-intensive.
- May offer lower cost-effectiveness than renewables in some cases.
- Capture and compression are expensive and energy-intensive.
- Storage feasibility and safety
- Long-term monitoring and liability remain concerns.
- Requires strict regulations for storage integrity.
- Long-term monitoring and liability remain concerns.
- Risk of fossil-fuel lock-in
- Over-reliance could delay energy transition.
- May allow fossil firms to justify extended operations.
- Over-reliance could delay energy transition.
- Scale and timing challenge
- Deployment lags far behind modeled requirements for net-zero.
- Early deployment is crucial to avoid cumulative emissions.
- Deployment lags far behind modeled requirements for net-zero.
- Utilization vs. storage trade-offs
- Using COβ to make fuels often re-releases it later.
- Permanent storage provides stronger climate benefit.
- Using COβ to make fuels often re-releases it later.
π§ Policy and Economic Perspective
- Essential but conditional: Needed for deep decarbonization but not sufficient.
- Strategic value: Best deployed where emissions are hardest to eliminate.
- Economic design: Requires carbon pricing, tax credits (e.g., 45Q), or subsidies.
- Distributional implications: Who pays, who benefits, and local justice concerns.
π§© Summary
| Dimension | Assessment |
|---|---|
| Climate relevance | πΉ High β critical for hard-to-abate sectors |
| Cost-effectiveness | βοΈ Moderate β improving but still expensive |
| Risks | β οΈ Fossil lock-in, leakage, monitoring burden |
| Policy role | π§ Part of a diverse mitigation portfolio |
In short:
CCUS is very relevant for climate mitigation β especially for industrial and negative-emission pathways β
but its success depends on cost reduction, regulation, and integration with broader decarbonization efforts.
π References
π¬ Discussion
Welcome to our Week 11 Discussion Board! π
This space is designed for you to engage with your classmates about the material covered in Week 11.
Whether you are looking to delve deeper into the content, share insights, or have questions about the content, this is the perfect place for you.
If you have any specific questions for Byeong-Hak (@bcecon) or peer classmate (@GitHub-Username) regarding the Week 11 materials or need clarification on any points, donβt hesitate to ask here.
Letβs collaborate and learn from each other!