Policy Portfolio Options for Encouraging Deployment of Negative Emissions Technologies in the Electricity System

Negative emissions technologies, like direct air capture (DAC) of CO₂ and carbon capture and storage (CCS), could play a role in the transition to net-zero emissions in the electricity system. These technologies both capture CO₂: CCS captures CO₂ from a point source, such as a fossil-fueled power pant, while DAC captures CO₂ from the ambient air. DAC could be used to offset residual emission from CCS-enabled power plants with imperfect (<100%) CO₂ capture rates. Studies have shown that they can reduce the cost of achieving net-zero, but this prior work has focused on outcomes achieved in the final year of the transition to net-zero, such as cost and technological portfolio. Less attention is paid to important transition dynamics, including cumulative emissions and the effect of deployment on electricity prices. Here, we study the impact of negative emissions technologies on transition dynamics within the electricity system, focusing on how they affect cumulative emissions, electricity prices, and abatement costs. We model several policy portfolios, or scenarios, with differing net-zero commitments, deployment subsidies, and carbon pricing. Across scenarios, we find that these technologies play a minimal role in achieving net-zero. Instead, the policy portfolio combining graduated carbon pricing and a renewables subsidy yields the smoothest transition dynamics for electricity prices, and the lowest cumulative emissions and abatement costs.