Deciding between carbon trading and carbon capture and sequestration: An optimisation-based case study for methanol synthesis from syngas Fehmi Görkem Üçtu  g a, * , Semra A  gralı b ,Yıldız Arıkan a , Eray Avcıo  glu c a Bahçes ¸ehir University, Department of Energy Systems Engineering, Çıra gan Caddesi, 34353 Besiktas, Istanbul, Turkey b Bahçes ¸ehir University, Department of Industrial Engineering, 34353 Besiktas, Istanbul, Turkey c Politecnico di Milano, Management Engineering, Via Anzani 9, Como, Italy article info Article history: Received 5 November 2012 Received in revised form 11 July 2013 Accepted 21 October 2013 Available online 16 November 2013 Keywords: CO 2 emission reduction CCS Carbon trading GAMS Non-linear optimisation Methanol abstract The economic and technical feasibility of carbon capture and sequestration (CCS) systems are gaining importance as CO 2 emission reduction is becoming a more pressing issue for parties from production sectors. Public and private entities have to comply with national schemes imposing tighter limits on their emission allowances. Often these parties face two options as whether to invest in CCS or buy carbon credits for the excess emissions above their limits. CCS is an expensive system to invest in and to operate. Therefore, its feasibility depends on the carbon credit prices prevailing in the markets now and in the future. In this paper we consider the problem of installing a CCS unit in order to ensure that the amount of CO 2 emissions is within its allowable limits. We formulate this problem as a non-linear optimisation problem where the objective is to maximise the net returns from pursuing an optimal mix of the two options described above. General Algebraic Modelling Systems (GAMS) software was used to solve the model. The results were found to be sensitive to carbon credit prices and the discount rate, which de- termines the choices with respect to the future and the present. The model was applied to a methanol synthesis plant as an example. However, the formulation can easily be extended to any production process if the CO 2 emissions level per unit of physical production is known. The results showed that for CCS to be feasible, carbon credit prices must be above 15 Euros per ton. This value, naturally, depends on the plant-specific data, and the costs we have employed for CCS. The actual prices (z5 Euros/ton CO 2 ) at present are far from encouraging the investors into CCS technology. Ó 2013 Elsevier Ltd. All rights reserved. 1. Introduction In recent decades, increasing greenhouse gas (GHG) emission is one of the main reasons for global warming with adverse envi- ronmental effects such as sea level rise, floods, droughts, etc. Fossil fuel power plants, and many other industries such as iron and aluminium, cement, lime, hydrogen, ammonia and methanol plants have been known as the major emission sources of greenhouse gases, of which the most abundant one in the atmosphere is carbon dioxide, or simply CO 2 (IPCC Fourth Assessment Report, 2007; Soltanieh et al., 2012). Industrial activities account for 40% of global energy-related CO 2 emissions. In 2007 the worldwide figure for CO 2 emissions caused by industrial activities was 7.6 gigatonnes equivalent (Gte) of direct CO 2 emissions whereas the indirect CO 2 emissions due to electricity production for industrial activities were 3.9 Gte (Roddy, 2012). Reduction of fossil fuels (oil, gas, coal) con- sumption via enhanced energy efficiency, carbon capture and sequestration (CCS), conversion of CO 2 to different products, increasing utilisation of renewable energies and reforestation are effective options to achieve mitigation so as to reach the Kyoto Protocol targets (Chicco and Stephenson, 2012). Coal-fired power plants are the most common source of elec- tricity production with a global share of 41%. Despite the high level of environmental impact of coal combustion, economic incentives urge many countries towards a coal-dominant energy sector, ex- amples of such countries being U.S.A., China, India and partly Turkey (Cristóbal et al., 2012b). Turkey produces approximately 25% of its electricity through local or imported coal (Capik et al., 2012), and coal is the main energy source of the country as far as local resources are concerned, a situation caused by inadequate natural gas and petroleum reserves. Hence, GHG emissions related to coal utilisation is a significant problem for Turkey, and these emissions must be lowered for a sustainable future. Under these * Corresponding author. Tel.: þ90 (0) 212 381 5691; fax: þ90 (0) 212 381 0550. E-mail address: gorkem.uctug@bahcesehir.edu.tr (F.G. Üçtu g). Contents lists available at ScienceDirect Journal of Environmental Management journal homepage: www.elsevier.com/locate/jenvman 0301-4797/$ e see front matter Ó 2013 Elsevier Ltd. All rights reserved. http://dx.doi.org/10.1016/j.jenvman.2013.10.016 Journal of Environmental Management 132 (2014) 1e8