Abstract
Government support for CCS-EOR projects is sometimes contested on the grounds that the resulting increase in oil production undermines their environmental benefits. Addressing this concern requires determining the effects of implementing CCS-EOR on global CO2 emissions. This paper presents a simple approach based on a marginal reasoning consistent with economic decision-making. It produces analytical formulas that account for the effects on the global oil market of incentivizing CCS-EOR. Our results suggest that, from an economic perspective, CCS-EOR is a technology that mitigates global emissions, but the emissions reduction is less than the stored quantity of CO2. Based on our results, we discuss the size of the fiscal incentives granted by the US Inflation Reduction Act to support CCS-EOR.
