To make good economic decisions, economic actors need to know their objectives and the cost and benefits of activities that are aimed at meeting their objectives. Net zero (zero CO2 carbon emissions into the atmosphere) by 2050 seems to be gaining global traction as an objective, but how to achieve that objective has been the subject of much speculation. The most serious scenarios suggest that significant levels of carbon capture and sequestration will be needed to meet the ambitious CO2 emission reduction targets set. What such carbon capture and sequestration (or storage) emission reductions will cost from various stationary emitting sources is the main subject of this chapter. This survey considers an extensive number of surveys and studies in the last two decades, considering costs along the supply chain: capture, transport, and storage. There seems to be general agreement that for some activities—for example, ethanol, ammonia, fertilizer production, natural gas processing, and some technologies to produce hydrogen—capture cost is less than $40/ton and, in some cases, may be as low as $15/ton. For power generation and other heavy industries, costs are thought to be above $40/ton, with a wider range of uncertainty (in some cases, up to $100/ton or more). Transport costs are probably the best costs understood along the supply chain. They, of course, vary by distance and capacity, but at commercial scales, onshore pipeline transport at distances less than 100 km is likely to be less than $2/ton. Further, storage at scale will require vast underground capacity. Considerable effort has been expended on evaluating CO2 sources and sinks, and a summary of the most extensive databases found and issues related to storage are also included. Evidence to date suggests that storage space is plentiful, but the cost is quite uncertain.

With climate concerns escalating, many are considering how to limit global temperature increase to less than 1.5°C as set in the Paris Agreement in 2015. Most scenarios see a role for carbon capture and storage (CCS). Although much effort has been expended on studying CCS’s technical feasibility and cost, economic barriers exist, and very little CO2 has yet been sequestered. In this chapter, we summarize the economic aspects of CCS for stakeholders, taking into account where we are, how far we still have to go to meet our targets, and how we might get to these targets. This will entail a consideration of barriers to CCS, simple models to show the need for enabling policy, and an outline of CCS in the broader history of global climate concerns and modeling. Furthermore, we survey the pros and cons of existing and needed policies, an overview of existing commercial and prototype projects and policies, and CCS-focused economic modeling efforts. We conclude with recommendations for the path forward.

Several large scenario exercises in the last years present decarbonizing transitional energy pathways to 2050 and beyond. This changing energy landscape toward net zero is new territory to explore but is expected to be more intensive in mineral based materials than the current system. Mapping this territory and understanding the critical material needs to support the transition are essential for demanders and suppliers as well as policy makers seeking to orchestrate the transition. Our contribution is to provide such decision makers for electricity markets with a transparent tool that can be easily understood and modified as our transitional knowledge improves. In this tool, we take the International Energy Agency’s conservative Beyond Two Degrees scenario, which projects renewable energy penetration for 15 electricity technologies, supplemented by Bloomberg’s Electrical Vehicle Outlook. Coupling these electricity projections with estimates of material use per GW of new capacity, we estimate resulting needs for 33 materials through 2050. Assuming constant material intensities and recycle rates, our model finds dramatic increases in most included materials from 2021 to 2050. The total projected tonnage increases in materials used for the transition is 294% with a compounded average annual growth rate of 4.8%. However, there is wide heterogeneity across materials (from slightly negative for tungsten to nearly 1300% for lithium). Projected 2050 sales vary from less than 30 tonnes for hafnium and yttrium (with quantity demanded growth of − 4.8% from 2021 to 2050) to more than 17 million tonnes for steel (with growth of 291%) and aluminum (growth 419%). At 2021 prices, 2050 sales revenue varies from less than a million dollars for boron (growth of 164%) to more than $42 billion for aluminum (growth 419%), nickel (growth of 279%), and steel (growth of 291%).

Gasoline subsidies distort the gasoline market resulting in inefficiencies and a costly burden in government budget. In Indonesia, they have taken up to 15 % of the government expenditures that arguably could be better spent elsewhere. Governments are aware of these costs, yet face difficulties in removing the policy. Governments would like to release the subsidy fund for other programs while still maintaining political power. Simultaneously, a reform will reduce the purchasing of the population and thus, it is commonly met with strong public resistance. The general population can influence the government’s decision to carry out a reform by exerting pressure that may affect the country’s political stability. There is a vast economics literature analysing the economic impact from a subsidy reform. Meanwhile, the government’s hesitancy is analysed in the political science literature. We combined these two fields by developing a quantitative game theory model to show the interaction between the government and the general population. The model is based on Indonesian data but provides a framework that can be applied elsewhere. Different policy removal schemes are simulated including completely or partially phasing-out the subsidy with and without compensation. An important take-away from our analysis is that it provides a framework showing governments what they have to quantify in order to make an informed policy decision. Another important implication is that the success of the policy reform is highly dependent on the selectorates trust to the government. It strongly supports the political science recommendations of building trust through transparency and inclusion.

Depletion of minerals and other non-renewable resources has long been a source of worry to industrial economies. This worry waxes when markets are tight and wanes when they are not. However, evidence has continued to mount that there are staggering amounts of minerals in space that are technically within our grasp. Scientific work has considered mineral availability and technical ability to mine on near earth objects. Within the last decade, a number of space related industries have gained attention. While availability and technical feasibility are both necessary conditions for this industry to develop, they are not sufficient. Rather sufficiency also requires financial feasibility. Although studies have considered the costs of mining asteroids, we are aware of no papers that model the effects on terrestrial mineral market structure with the injection of extra-terrestrial minerals. Our contribution is to consider the current state of mineral markets and provide a model of firm entry to derive implications to the market from space mined minerals entering the market. We provide a numerical simulation to demonstrate what prices asteroidal entrants might face for the injection of a variety of metals and provide an online model for others to change inputs to their asteroid and metals of choice.

Environmental concerns about carbon emissions coupled with the oil industry’s need to secure additional CO₂ for enhanced oil recovery (CO₂-EOR) projects have sparked interest in the potential that CO₂-EOR may have in jumpstarting carbon capture and sequestration (CCS). However, existing studies on the viability of coupling CO₂-EOR with CCS have generally placed more focus on either the engineering or economic aspects of the problem. Most engineering studies focus on the technical aspects of the CO₂-EOR project to produce the maximum amount of oil, while simultaneously storing the most CO₂ during the production process with the economics as an afterthought, while most economic studies found have focused on a singular aspect of the issue such as impacts of exogenously varying injection rates. Furthermore, modelling efforts have stopped at the end of the productive life of the field. We build a unique two-stage dynamic optimization model, which simultaneously addresses engineering and economic policy aspects, to study the viability of coupling CO₂-EOR transitioning into CCS. Our model includes a carbon tax for emissions, which becomes a subsidy for full scale sequestration after oil production has ceased; this allows us to explore the transition from CO₂-EOR, our first stage, to sole CO₂ sequestration in our second stage for a single field. We maximize the operator’s profits across both stages, while tracking the responsiveness of oil production and total carbon movements to both price and policy changes. We pair our optimization model with a reservoir simulation model, allowing us to mimic actual field behavior, giving our work a more realistic representation of both production and sequestration profiles. Our results suggest that small increases in the level of carbon tax can have large and discontinuous impacts on net sequestration. This stems from the observed transition from limited natural sources of CO₂ to more expensive captured CO₂ resulting from the implemented policy. With appropriate taxes, total volumes of captured CO₂ sequestered across both stages are equivalent to 30 to 40% of the emissions from the use of the oil produced. With the credits oil producers receive from sequestering CO₂, which equate to the tax, relatively high carbon taxes incentivize additional sequestration without significantly impacting the supply of oil. This, alongside maintaining a steady stream of profits, is a win-win situation for energy security and the climate.

Gasoline demand has been extensively researched, yet there has been no attempt to estimate cross-price elasticities of different grades of gasoline. Such knowledge will allow accurate determination of the impact of a fuel pricing policy that has different rates of tax or subsidy depending on the gasoline grade. Using monthly data on the Mexican gasoline market from 1999 to 2014, regular gasoline demand is estimated with an ARDL model. Endogeneity of the price and structural break are also investigated. The cross-price elasticity between regular and premium gasoline is found to be 0.875, confirming high substitutability among gasoline with different grades.

A gasoline subsidy is one of the most prevalent strategies for distributing welfare to the people in oil-producing countries. However well-intentioned, the policy will distort the gasoline market with the resulting inefficiencies. Furthermore, the gasoline subsidy takes a great amount of government's budget. Arguably, these funds could be spent elsewhere with a greater impact on economic growth. These governments are aware of the cost of such a policy, yet face difficulties in removing the policy because of strong resistance from the public. This paper looks at the unique case of Indonesia that only provides a subsidy for regular gasoline and in turn proposes an alternative policy that introduces a subsidy for premium gasoline at a lower rate to reduce the overall gasoline subsidy cost. There has yet to be any research that simulates price controls for gasoline with different grades. The aggregate demand for gasoline in Indonesia is replicated using a translog cost calibration approach. Simulations based on the calibrated demand are then performed and the results confirm the existence of potential savings that are largely determined by the cross-price elasticities between regular and premium gasoline. The benchmark scenario, based on a recent study of substitutability between gasoline by grades, results in an 11.5% reduction in subsidy cost of around 950 million USD with a subsidy rate of Rp 2254/liter. Furthermore, the optimal rate of subsidy for premium gasoline results in a reduction of inefficiency as consumers' welfare increase by 6.8 trillion rupiahs (or 560 million USD).