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How CO2 Capture and Storage Can Mitigate Carbon Leakage / Philippe Quirion, Julie Rozenberg, Olivier Sassi, Adrien Vogt-Schilb. FEEM, 2011, 23 p. (Note di lavoro ; 2011.015)http://www.feem.it/userfiles/attach/20112101158254NDL2011-015.pdfMost CO2 abatement policies reduce the demand for fossil fuels and  therefore their price in international markets. If these policies are  not global, this price decrease raises emissions in countries without  CO2 abatement policies, generating “carbon leakage”. On the other hand,  if the countries which abate CO2 emissions are net fossil fuel  importers, they benefit from this price decrease, which reduces the  abatement cost. In contrast, CO2 capture and storage (CCS) does not  reduce fossil fuel demand, therefore it generates neither this type of  leakage nor this negative feedback on abatement costs. We quantify these  effects with the global hybrid general equilibrium model Imaclim-R and  show that they are quantitatively important. Indeed, for a given  unilateral abatement in OECD countries, leakage is more than halved in a  scenario with CCS included among the abatement options, compared to a  scenario prohibiting CCS. We show that the main reason for this  difference in leakage is the above-mentioned international fossil fuel  price feedback. This article does not intend to assess the desirability  of CCS, which has many other pros and cons. It just identifies a  consequence of CCS that should be taken into account, together with many  others, when deciding to what extent CCS should be developed. (© FEEM)