Analysis of optmization of carbon markets of turkish power plants

Climate change brought about by increased greenhouse gas (GHG) emission is a serious challenge that threatens society. In attempt to curtail GHG emissions, governments have implemented various policies that incentivizes industries to reduce carbon emissions. In the case of power plants, governments have implemented a limit in which plants can emit under the pain of heavy fines. In some countries where there is an emission cap and trade system (ETS), power plants can trade their limits of carbon emissions with other power plants. Furthermore, some industries, such as beverage or oil drilling industries have commercial use for carbon dioxide, so the captured carbon from plants can be sold to these industries. Thus, in order to meet carbon emission mandates, power plants have the option to either capture and storage carbon (CCS), capture and utilize carbon (CCU), or trade carbon in the ETS. As time progresses, governments have enforced stricter carbon emission limits. In other words, the limit in which a plant can emit carbon decreases gradually over time, hence there is a growing incentive to implement CCS or CCU eventually. Furthermore, if there is a profit that can be made, it would be financially wise to do so early on the time horizon since not doing so early would result in higher cost in terms of net present value and lost opportunity cost. Semra Agrali and colleagues modeled the carbon market of a power plant and applied the model to a case study for coal power plants in Turkey using GAMS (Agrali, Uctug and Turkmen). For this project, we plan to study the structure of the carbon market and replicate the results of optimizing the carbon market of Turkey in GAMS.