CARBON ACCUMULATIONS AND TECHNICAL PROGRESS — A SIMULATION STUDY OF COSTS*

AuthorDennis Anderson,Catherine D. Bird
Publication Date01 Feb 1992
DOIhttp://doi.org/10.1111/j.1468-0084.1992.mp54001001.x
OXFORD BULLETIN
of
ECONOMICS and STATISTICS
Volume 54 February 1992 No. 1
OXFORD BULLETIN OF ECONOMICS AND STATISTICS. 54. 1 (1992)
0305-9049 S3.0()
CARBON ACCUMULATIONS AND
TECHNICAL PROGRESS - A SIMULATION
STUDY OF COSTS*
Dennis Anderson and Catherine D. Bird
IINTRODUCTION
Discussions of the global warming problem too often proceed as if there were
no economically or operationally feasible substitutes for fossil fuels - other
than nuclear energy, which of course has environmental problems of its own.
However, there is a flourishing engineering-economics literature in such sub-
stitutes, primarily renewahies, and significant public and private R&D
activity.' High oil prices in the period 1973-85 stimulated commercial
*This paper is an outcome of a study on International Aid and the Environment, sponsored
by ODA. Thanks are gratefully expressed to the ODA, and to the many people who have
generously shared their time with one or both of us during the work. We especially wish to
thank Professor David Hall (King's College, London), Professor Bob Hill (Newcastle Upon
Tyne Polytechnic), Toby Harrison, Neil Gregory, Nick Highton and Ian Haines (ODA), Dr
Lloyd O Herwig (US DoE). Dr Beth Taylor (UK DoE, ETSU, Harwell) and her colleagues.
Joanne Burgess and Ed Barbier (London Environmental Economics Centre), our colleagues
Professor David Pearce, David Bevan, Paul Collier and Wilfred Beckerman for their
encouragement as the work proceeded and David Kernohan for looking after administrative
arrangements. UCL, and the Centre for Africa Studies at the Institute of Economics and
Statistics, Oxford, generously provided us with facilities. The usual disclaimers apply. A fuller
version of the paper setting out the results in detail is provided in Anderson and Bird (1990).
The following are among the many studies we have found especially helpful in reviewing the
technological options; OECD (1987 and 1989a); P. D. Dunn (1986); K. F. Langley (1983,
1987); E. Taylor (1989); D. O. Hall and P. D. Overend (1987); R. Hill (l989a,b,c and 1990);
Thurlow (1990); US Department of Energy (1990); Manne and Richels (1 990); Nordhaus
(1 990a,b); Pearce, Markandya; Barbier and Burgess (1990); Sinor (1990); Ager-1-Ianssen
(1990); Giraud (1990); the special edition of Scientific American (September 1990) for a non-
technical (if perhaps idealistic) view of technological possibilities edited by Davis (1990);
Grubb (l990a,b) and the Shell Briefing Service Publication No. 2, 1987. on synthetic fuels and
renewable energy and Williams (1990).
2BULLETIN
Solar
Biomass
(Wood, crops,
residues,
equatic
plants)
Afforestation
Hydro, Geothermal,
Wind, Waves, Tidal
Nuclear Power
IThermal
) Photovoltaics
) Photoelectrochemical
t. Direct Combustion
Gasification
Methanol Synthesis
Liquefaction
Fermentation
Residues - Combustion
Wood Products
Agro-forestry
Windbreaks
Watersheds
Forest Reserves
Fission or
Fusion?
Direct Heat
Electricity
Hydrogen
Hydrides,
Batteries,
Fuel Cells
Gas
Methanol
(Catalyst)
Synfuels
(Diesel
and Petrol)
Ethanol
Electricity
Carbon Sinks
Fossil Fuels
Electricity
Electricity
Hydrogen,
Batteries
Fig. 1. Technical options for meeting commercial energy demands with zero or
negative net carbon emissions
research into nuclear energy, solar energy from photovoltaics and thermal-
collector (thermal-solar) schemes, hydrogen fuels based on these energy
resources, and the use of biomass for electricity generation (so-called
dendrothermal plants) and the production of liquid fuels such as ethanol and
methanol, again from biomass.2 But economic interest in such schemes
declined following the collapse of oil prices in 1986, though undoubtedly
would be revived again if fossil fuel prices were to rise for a significant period
or if carbon taxes were introduced. In theory, non-fossil fuel energy resources
are capable of meeting all the world's energy demands over the long-term.
This paper presents the results of a simulation study into the costs of sub-
stituting non-net-carbon emitting energy sources for fossil fuels, assuming
2For industry discussions of the options see the Shell papers of van der Toorn (1987, 1988)
and an excellent paper on biomass by Booth and Elliott (1990).
Process Non Carbon Option
Fossil Decarbonisation Hydrogen,
Fuels Fuel Cells

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