Financing CCS - New WCI Report
Ecoal December 2009, Volume 69
The World Coal Institute (WCI) recently published a new report "Securing the Future - Financing Carbon Capture and Storage in a Post-2012 World". As we head into the climate talks in Copenhagen, the issue of funding technologies that enable significant cuts to be made in CO2 emissionsbecomes ever more important.
Earlier this year, Yvo de Boer, the head of the UN Framework Convention on Climate Change (UNFCCC) - the body responsible for negotiating a successor to the Kyoto Protocol in Copenhagen - stated: "Fossil fuels are here to stay and will continue to be the drivers of growth. It is a collective responsibility to use these fossil fuels without destroying our environment. Let us not cut off our nose to spite our face by refusing to explore the technologies that can help us to achieve this".
This new report from the WCI focuses on the issue of financing CCS technologies. CCS is the only currently available technology that allows deep cuts to be made in CO2 emissions from fossil fuels and must be deployed at scale if climate change is to be successfully addressed.
Substantial effort is being made to accelerate the development and deployment of CCS, particularly in developed countries, with governments focusing on a post-2012 timeframe. This report compares the support of CCS to that given to other low-carbon technologies, suggests next steps to overcome current barriers, gives funding options and discusses the costs of accelerating the widespread deployment of CCS.
Costs of CCS
The cost of CCS - even during the demonstration phase when the costs are highest - already compares favourably with renewables. According to the International Energy Agency (IEA), without CCS, climate mitigation costs are 71% greater, around US$1.28 trillion more annually. However, this does not mean transferring investment from other low carbon energy technologies to CCS; if climate change goals are to be achieved then investment in all forms of clean energy, including CCS, must be increased dramatically and rapidly.
Current deployment rates for all low-carbon technologies are inadequate to reach government mitigation targets. In particular, current CCS deployment is too slow to allow necessary global GHG emissions reductions goals to be achieved. There is an urgent need to fund demonstration projects and that funding needs to come from both governments as well as a robust carbon market.
Governments Need to be Ambitious
Climate change demands governments to be ambitious. Failure to deploy CCS will be costly and undermine the environmental effectiveness of global mitigation programmes.
Emissions trading alone will not drive the energy technology revolution. The CCS roadmap published by the IEA in October this year indicates how ambitious governments need to be on all low carbon technologies and that governments have a central role to play in facilitating the necessary research and innovation into CCS. The roadmap calls for a substantial increase in the current number of CCS projects and WCI fully supports the IEA Roadmap and calls for governments to play a more proactive, catalytic role.
While there are a number of issues that are cited as barriers to CCS, the private sector cannot proceed with a deployment programme on its own. The real barriers to widespread CCS deployment are not technological, they are political and financial.
The report concludes that while responding to global warming is expensive, CCS massively reduces the cost of an effective climate change response. In a post-2012 world, government policies need to include CCS as the costs for deploying CCS are at least comparable to, and in many cases better than, the costs for deploying other low-carbon technologies.
