Power Producer's Carbon Capture Investment Timing under Price and Technology Uncertainties

Carbon capture and storage (CCS) technology is one of the most effective way of reducing emission. In this paper, we present a carbon capture investment model of power producer under carbon price and CCS technology uncertainties with real option theory. Then the investment t iming of CCS is explored by numerical simulation, the results indicate that the carbon price volatility and technological improvement of carbon capture will both delay carbon capture investment, and power producers will choose not to invest if the volatility is big enough.