A novel stochastic market potential optimisation model for clean technology uptake modelling

Abstract

The high mitigation cost of clean innovations, warrants policy support for increased uptake. This study applies optimization techniques to investigate the impact of market-based policies in generating sufficient demand pull to trigger cost reduction under uncertainty. A novel Stochastic Market Potential Optimization model (SMPOM) is developed to maximize the cost difference between the initial cost of a technology and the new cost using a market-based policy. The model is applied to a case study of carbon capture and storage (CCS) in 32 integrated steel plants in Europe. Results show policy induced demand pull can reduce the mitigation cost of CCS.