Abstract

Despite previous literature evaluating the economic feasibility of carbon capture and storage (CCS) in the energy and power sector, there are limited studies examining the impact on consumer prices - particularly energy prices and their variability. Using a Monte Carlo simulation based on a profit-maximization model in an oligopolistic market, we examine how production and abatement costs, policy incentives — including a carbon tax, renewable energy subsidies, and CCS subsidies — and energy demand parameters influence the percentage of carbon captured by a producer operating a diverse portfolio of energy-generating technologies. Additionally, we assess how these factors contribute to fluctuations in prices for renewable and non-renewable energy products. Our findings suggest that when mixed-asset generators optimize carbon abatement to maximize profits, the relationship between the percentage of carbon captured and energy prices varies by energy source. Increasing carbon capture rates can lower the price of fossil-based products, driven by net benefits from CCS subsidies and tax savings, while the price of greener products sees a modest increase due to the net costs of shifting production from renewable to non-renewable assets.

Department(s)

Economics

Publication Status

Open Access

Comments

National Science Foundation, Grant 2308737

Keywords and Phrases

CCS; Energy affordability; Power generators; Profits; Renewable energy

International Standard Serial Number (ISSN)

0954-349X

Document Type

Article - Journal

Document Version

Citation

File Type

text

Language(s)

English

Rights

© 2026 Elsevier, All rights reserved.

Creative Commons Licensing

Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Publication Date

01 Jun 2026

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Economics Commons

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