Carbon Capture Regulation for The Steel and Aluminum Industries in the UAE: An Empirical Analysis

Carbon Capture and Storage (CCS) has been identified as one of the most promising means to reduce carbon emissions. As the cost of CCS remains high and uncertainty prevails, government incentives are essential to mobilize CCS deployment. This paper presents an incentive compatible carbon price regulatory regime to align CCS with Enhanced Oil Recovery (EOR). We then perform a numerical analysis on the macroeconomic effect of CCS with FOR on the Abu Dhabi economy for CO2 capture from the steel and aluminum industries. Result shows that the current scale of CCS remains too small and can only increase the supply of gas by 0.1% for Abu Dhabi. CO2 captured from the steel industry tends to generate higher value added than aluminum industry due to difference in CO2 intensity and energy penalty.