Which Climate Subsidy Is the Best Return on U.S. Federal Investment: CCS or Rooftop Solar?

Abstract We use probabilistic cash-flow modeling to estimate the value of three government subsidies: (1) carbon capture and storage (CCS) where CO2 is injected for geologic storage (CCS-GS); (2) CCS where CO2 is used for enhanced oil recovery (CCS-EOR); and (3) government-funded zero-interest loans for installation of rooftop photovoltaic arrays. We compute the present value of each subsidy to the beneficiary and the return on government investment in keeping CO2 out of the atmosphere. Only rooftop solar and CCS-GS lower net CO2 emissions; CCS-EOR unavoidably increases atmospheric CO2. Under realistic assumptions, only CCS-EOR can be profitable for project developers; CCS-GS is never profitable for any industry. By contrast, rooftop solar’s average net present value for homeowners is $7895; rooftop solar is profitable across all US regions, in 100 percent of cases. The average discounted unit cost to the government of the solar subsidy is $49/tCO2; for CCS-GS, it’s $42/tCO2; for CCS-EOR, the government pays to increase atmospheric CO2.