View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Research Papers in Economics CCS from the gas-fired power station at Kårstø? A commercial analysis1 by Petter Osmundsen* and Magne Emhjellen** * University of Stavanger ** Petoro AS Summary The article presents a commercial investment analysis of the carbon capture project at the Kårstø gas processing plant in south-western Norway. We update an earlier analysis and critically review the methods used including those applied for cost estimating. Our conclusion is that carbon capture and storage (CCS) at Kårstø would be a very unprofitable climate measure with poor cost efficiency. It would require more than USD 1.7 billion2 in subsidies, or in excess of USD 133 million per year. That corresponds to a subsidy of roughly USD 0.1 per kilowatt-hour on the power station s electricity output. The cost per tonne of carbon emissions abated is about USD 333, which is about 20 times the international carbon emission allowance price and many times higher than alternative domestic climate measures. * Petter Osmundsen, department of industrial economics and risk management, University of Stavanger, NO-4036 Stavanger, Norway E-mail:
[email protected], home page: http://www5.uis.no/kompetansekatalog/visCV.aspx?ID=08643&sprak=BOKMAL ** Magne Emhjellen, Petoro AS, P O Box 300 Sentrum, NO- 4002 Stavanger, Norway. E-mail:
[email protected] 1 Thanks are due to Johan Gjærum, Per Ivar Gjærum, Kåre Petter Hagen and Knut Einar Rosendahl for constructive comments. We would also like to thank a number of specialists in business and the civil service for useful comments and proposals.