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Cop 21: CCS projects 'need' CO2 pricing

08 Dec 2015 17:19 GMT
Cop 21: CCS projects 'need' CO2 pricing

London, 8 December (Argus) — A strong price on carbon must be implemented to incentivise the development of more carbon capture and storage (CCS) projects, according to UK climate economist Nicholas Stern.

Stern's Grantham Research Institute on Climate Change and the Paris-based IEA view CCS as vital to limiting global temperatures to a 2°C rise — the maximum threshold permissible if dangerous climate change is to be avoided.

There are 15 operational CCS projects globally. This number needs to increase significantly, and good policy is vital for growth, Stern said. "A good, strong price of carbon should be at the top of the list."

The EA estimates that a price on carbon of around $50/t of CO2 equivalent (CO2e) is necessary to incentivise CCS developments. No carbon taxes or emissions trading schemes (ETS) impose such costs at present.

EU industry has long called for feed-in tariffs to incentivise projects. But there are other options, according to the Engo Network on CCS coalition, citing direct subsidies, tax credits and earmarked ETS revenues.

The UN's Clean Development Mechanism failed to result in the start-up of CCS projects, owing to the falling value of credits, as has the EU ETS' innovation fund, the group said.

A rising carbon price, combined with strategic performance standards for key sectors, will allow the deployment of the technology, as long as the policies remain consistent, US non-governmental organisation the National Resources Defence Council said.

CCS will be necessary to reduce emissions that will be released by 2030 under current intended nationally determined contributions to a successor treaty to the Kyoto protocol, Stern said.

The INDCs indicate that emissions will total 55bn t/yr CO2e by 2030, 5bn t/yr CO2e more than a trajectory that will limit temperatures to a 2°C rise, he said.

"In the next 15 years, we will see increases in emissions when we should be seeing decreases, meaning that there will be an awful lot of catching up to do."

The UN's Green Climate Fund can play a role in the development of CCS projects in emerging economies, Global CCS Institute chief executive Brad Page said — but it cannot do it alone.

"You need to de-risk this. That means getting the right sort of financing coalition together," he added, citing potential partners including multilateral development banks and the private sector.

The IEA and the World Bank have started negotiations on which organisation could co-ordinate activities between these bodies, effectively acting as a broker for nascent CCS projects around the world.