A CARBON CONSTRAINED SOCIETY: THE ECONOMICS OF CARBON CAPTURE, UTILIZATION AND STORAGE

Traditionally carbon dioxide (CO2) emissions has been viewed and treated as a “bad” rather than a “good”. This mental model is of little surprise due to a well-established consensus on carbon dioxide as a pollutant constraining the sustainability of economic and social development at a global scale. In the world where so many actors are preoccupied with shifting towards a low- carbon economy the very idea of carbon dioxide being a commodity (literally and not in the form of carbon caps or quotas trade, in which case a “commodity” is in fact the right to emit carbon, which is in its essence a very different concept) might be a big of a statement. However, this idea is not a mere perspective but a reflection of an already existing and developing market for CO2 with well-defined supply and demand sides. Paradoxically, the supply side of this nascent market was originally motivated by the intention to decrease CO2 emissions but now is giving rise to CO2 as a commodity. Ironically, the demand side (CO2 buyers) is the part of the market which is “hungry” for the commodity not being supplied in a demanded quantity. This thesis provides a conceptual overview of the market for CO2 where the supply is coming from CCUS industry and the demand originates in the enhanced oil recovery (EOR) industry. The paper is based on the research project (the working title “CCUS Market Dynamics”) conducted recently as a part of master thesis and currently PhD research. The project started in late 2013 as a system dynamics modelling effort focused on specific problem of CCUS technologies commercialization. However, eventually the problem necessitated the construction of the model of an integrated CCUS-EOR system, similar to the demand-pull market for carbon dioxide currently developing in the Permian Basin, TX. As viewed by the author, it is the market perspective towards CO2 which turned out to be the most insightful part and result of the modelling process. The system dynamics method and its endogenous approach appeared to be instrumental in grasping intricate interconnections between various dispersed (at least within conventional mental models) elements of the market for this new commodity. This thesis presents the first stone towards a comprehensive research on the feedback mechanisms between the CCUS and EOR industries which shape the CO2 market. It is the author’s highest aspiration to provoke interest to this topic and create momentum for its further progression.