Using Reverse Auctions in a Carbon Capture and Sequestration (CCS) Deployment Program

The document proposes a reverse auction system for CCS deployment, where the government procures CO2 sequestration by awarding incentives to the lowest bidders. It suggests separate auctions for projects with and without enhanced oil recovery (EOR) access and a grant loan program to mitigate early development risks. The author argues that this market-based approach is more efficient than fixed-level incentives, potentially doubling the capacity deployed compared to mechanisms proposed in the Kerry-Boxer bill.

• Reverse auctions are more suitable for CCS deployment programs than demonstration programs because deployment prioritizes "installing and operating capacity at the lowest reasonable cost."
• In a CCS reverse auction, the government would procure CO2 sequestration, and the winning bid would be the "lowest incentive price bid into the auction, expressed in dollars per ton sequestered."
• To ensure regional development in areas like the Midwest that lack access to enhanced oil recovery (EOR) revenues, the author recommends holding separate auctions for CCS projects that sell CO2 for EOR and those that do not.
• The author proposes a grant loan program to support early project development costs (e.g., engineering and permits); if a bid is selected in the auction, the loan is paid off, but if not, it is converted to a grant.
• The economics of CCS vary significantly across the U.S. coal fleet due to differences in unit size, heat rates, and EOR access, with required incentives estimated to range between "$40/tonne and over $100/tonne" in the absence of a carbon market.
• A reverse auction mechanism is presented as superior to fixed-level incentives, which the author claims will be either "inefficient" (paying more than necessary) or "ineffective" (too low to deploy any CCS).
• The document asserts that relying exclusively on a reverse auction could "roughly double the capacity deployed" compared to the incentive pricing mechanisms proposed in the Kerry-Boxer bill.

APA

Phillips, B. (2010). Using Reverse Auctions in a Carbon Capture and Sequestration (CCS) Deployment Program. Clean Air Task Force. https://cdn.catf.us/wp-content/uploads/2019/10/21093554/Using_Reverse_Auctions_in_a_CCS_Deployment_Program.pdf

Chicago

Phillips, Bruce. Using Reverse Auctions in a Carbon Capture and Sequestration (CCS) Deployment Program. Clean Air Task Force, 2010. https://cdn.catf.us/wp-content/uploads/2019/10/21093554/Using_Reverse_Auctions_in_a_CCS_Deployment_Program.pdf.

Wikipedia

{{cite report |last1=Phillips |first1=Bruce |title=Using Reverse Auctions in a Carbon Capture and Sequestration (CCS) Deployment Program |publisher=Clean Air Task Force |date=May 2010 |url=https://cdn.catf.us/wp-content/uploads/2019/10/21093554/Using_Reverse_Auctions_in_a_CCS_Deployment_Program.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{phillips2010using, author = {Phillips, Bruce}, title = {{Using Reverse Auctions in a Carbon Capture and Sequestration (CCS) Deployment Program}}, institution = {Clean Air Task Force}, year = {2010}, month = may, url = {https://cdn.catf.us/wp-content/uploads/2019/10/21093554/Using_Reverse_Auctions_in_a_CCS_Deployment_Program.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }