UN carbon market could set ‘standard’ for CCUS

The global carbon market developed by the UN under the Paris climate agreement could offer an "important international standard" for carbon capture, utilisation and storage (CCUS) projects generating carbon credits, delegates heard an industry event in Riga, Latvia, today.

As CCUS projects gain traction in Europe, and the question of how to credit the sequestered carbon volumes arises, investors might look to the carbon market being developed under Article 6.4 of the Paris deal as a standard, to provide orientation on issues such as baselines, or monitoring and verification, consultant Matthias Honegger told delegates at the Baltic Carbon Forum.

This would allow CCUS projects to be credibly implemented, Honegger said. The projects will need a clear and stringent baseline against which emissions reductions are calculated. They will need strict measuring, reporting and validation (MRV) methodologies. And they will need to be clearly embedded in the use-of-credits context, to prevent the double counting and double claiming of the emissions reductions, Honegger said.

The extent to which carbon removals will be included in the Article 6.4 mechanism is still open. The UN's climate body and the Article 6.4 supervisory body are hoping for the rules on the new market to be finalised by the end of next year, after several postponements. The supervisory body has explained the delay partly with the complexities of the removals issue.

Article 6.4 could provide guidance for CCUS actors from about 2024-25, Honegger said.

The greenhouse gas (GHG) inventory guidelines lack detail for carbon removals, and this is particularly the case when the carbon crosses borders, Honegger said. Border-crossing is central to a range of existing CCUS projects looking to transport the sequestered carbon from, for instance, industrial sites in continental Europe to sub-sea storage sites in the Norwegian North Sea.

It is as yet unclear where the carbon mitigation has legally occurred, an issue that policy makers will need to revolve "fast", Honegger said.

The EU's CCS directive outlines guidance on monitoring and reporting for physical leakage. But the actual operationalisation of the directive varies with the capacities at member state level, Honegger said.

The EU's proposed carbon removal certification framework (CRCF) could "in theory" become a revenue source for CCUS projects in the long term, Honegger said. But the CRCF's credibility has been "undermined" by fundamental problems at the stage of defining the scope of the framework. And how the framework will be embedded in the overall EU policy landscape is "unclear", Honegger said.

The voluntary carbon market, which Honegger said is one of the very few opportunities for CCUS projects to generate revenue, is likely to ignore the CRCF as "irrelevant", Honegger said.