Renewable energy technologies and carbon capture retrofits are strategic complements

This study models a profit-maximizing power generator's decision to (1) produce electricity, (2) use renewable energy technology, and (3) determine the percent of carbon dioxide emissions to capture using a carbon capture retrofit. Results suggest that, under the given model assumptions, when policy incentives (carbon capture subsidy and carbon tax) are sufficiently high, profit-maximizing generators could increase the percent of carbon dioxide captured with the increase in the share of electricity produced using renewable energy technologies. This suggests that with the right policy incentives, fossil-based power plants could adopt both renewable energy and carbon capture retrofits as investment options that are strategic complements (not substitutes).

Automated summary

The study suggests that with sufficient policy incentives, profit-maximizing power generators can increase the percentage of captured carbon dioxide by increasing the use of renewable energy technologies. Fossil-based power plants can adopt both renewable energy and carbon capture retrofits as strategic complements.