EURO 2024 Copenhagen
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973. Optimizing Carbon Capture, Utilization, and Storage Strategy: A Cap-and-Trade Integrated Approach for Power Companies

Invited abstract in session WD-24: Sustainable supply chains, stream Circular Economy, Remanufacturing and Recycling .

Wednesday, 14:30-16:00
Room: 83 (building: 116)

Authors (first author is the speaker)

1. Xiang Zhu
Operations, University of Groningen

Abstract

In pursuit of carbon peaking and carbon neutrality goals, this conference presentation introduces a comprehensive approach: the integration of the "carbon capture, utilization, and storage" (CCUS) strategy with the "cap and trade" principle. Addressing the challenge of securing commitments for both carbon capture and investment within the power sector, our proposed model incorporates linear CO2 storage, emissions allowance deposit, stochastic CO2 utilization demand, mean-reverting Lévy jump allowance price process, and a stochastic CO2 generation process during production. We present the derived optimal commitment policy, considering constraints such as physical carbon storage limitations and rational allowance deposit considerations. Through impact analysis, we demonstrate that our optimal policy allows companies to dynamically adjust investment levels to mitigate risks arising from uncertainties in CO2 generation and utilization demand. Specifically, under the cap and trade principle, companies can flexibly adapt to cover excess emissions or capitalize on remaining allowance deposits, thus enhancing profitability after achieving the optimal CO2 capture level under the CCUS strategy. This framework not only contributes to meeting environmental objectives but also provides a strategic and adaptive approach for power companies to navigate the complexities of carbon management.

Keywords

Status: accepted

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