ashok presentation at the cslf financign roundtable at singapore - 7 april 2011 clean

8/7/2019 Ashok Presentation at the CSLF Financign Roundtable at Singapore - 7 April 2011 Clean

1/19

1

CCS Demonstration in DevelopingCountries Analysis of Key Issues and

Barriers

Financing Roundtable

Singapore

7 April 2011

Ashok Bhargava


2/19

2

Disclaimer

The views expressed in this presentation are the

views of the ADB staff and DO NOT necessarily

reflect the views or policies of the AsianDevelopment Bank, its Board of Director or the

Governments they represent.


3/19

3

Contents

Background

CCS Issues and Barriers

With CCS coal-fired Power Plants Financial Analysis

Rationale for CCS Demonstration in DevelopingCountries

Fast track CCS Demonstration in Developing Countries

Recommendations

Role of CCS Demonstration Fund

Conclusions and Way Forward


4/19

4

Background

The Regional technical assistance ($350,000). CCSDemonstration: AnalysisofKeyPolicy IssuesandBarriersapprovedin May2009

The TA aims to analyze key issues and barriers, in particular, financingissues for CCS demonstration in developing countries

Thereport (Sept2010) includesanalysisandrecommendations


5/19

5

CCS Issues and Barriers An Overview


6/19

6

Issues and Barriers Strategic

CCS is seen as a climate change mitigation technology only ratherthan a low-carbon or near-clean energy technology. It has weaksupport from developing countries. No program, plan or targets inplace to promote CCS.

Uncertain market perception limiting investments and progress


7/19

7

Issues and Barriers Technical

No coal-based power plant with CCS; no experience indeveloping countries; complex design; no IGCC powerplants in developing countries; high energy penalty

Immature technology - high technical risks


8/19

8

Issues and Barriers Legal and Regulatory

Critical issue for environmental health and safety. Domesticregulatory framework not fully developed. Long-termstewardship rules are key element for CCS demonstrationand deployment.

High perceived risks due to long-term liabilities


9/19

9

Issues and Barriers Financial

High costs, excessive energy penalty, no incentives whichmake CCS a high cost-high risk investment decision.

Public funding is essential for initial demonstration projects.


10/19

10

Coal-fired Power Plants with CCS

Financial Analysis

The analysis aims to capture the impact of equipping a coal-basedpower plant with CCS

400 MW IGCC and 600 MW Supercritical (SC) plants wereconsidered based on cost estimates in PRC

Captured and stored CO2 is about 1.8 1.9 million t (Mt)

The base cost for IGCC plant is $1.6 million/ mega watt compared to$ 0.7 million / MW for SC


11/19

11


Financial Analysis..Contd

With CCS coal-fired power plants are financially unviable withthe existing tariff.


12/19

12




13/19

13

Electricity Tariff and Capital Cost Comparison in PRC

0.05

0.19 $/kWh

0.09 $/kWh

0.11 $/kWh

0.08 $/kWh

0

0.5

1

1.5

2

2.5

3

3.5

Wind IGCC + CCS SC+CCS Solar Std Coal

Cost($million/MW

)

0

0.05

0.1

0.15

0.2

Tariff($/kWh)

Cost ($M/MW) Std Coal tariff (ct $/kWh)



Comparingwith CCS coal-fired powerplants with only coal-fired powerplant without CCS is not a fair comparison


14/19

14

Rationale for CCS Demonstration in

Developing Countries

Very good fit with the targetedcarbon intensity

Large-coal-fired capacity

addition (without CCS) willundermine the impacts of windand solar plants

Energy security solution

At the moment, CCS is theonly technology to reduce CO2emissions from fossil fuelpower plants


15/19

15

Fast Track CCS Demonstration

Recommended Actions

Action Purpose By

Establish CCSDemonstration Fundof billion dollar scale

Overcome near- tomedium-termcommercial/economicgaps (up to 2020)

Provide positiveincentives for CCSdemonstration

Reduce time lag forCCS demonstrationbetween developedand developingcountries

Contributions fromdeveloped countries

Multilateraldevelopment banks toactively work with thedonor governmentsand developing

countries in setting upthe fund


16/19

16

Action Purpose By

Provide complementary policysupport

countryspecific pilot regulatoryframework

Provide suitable financialincentivestax relief, tariffpremiums for carbon-free

electricity, incentives, loanguarantees, etc. for with CCSdemonstration projects

Encourage energyand power companies in

developingcountries to moveforward with CCSdemonstration

Governments inrelevant developingcountries

Fast Track CCS Demonstration

Recommended Actions.contd


17/19

17

Role for CCS Demonstration Fund

A $5 billion fund to support CCS demonstration in developingcountries up to 2020

The Fund to lower risk profile for CCS demonstration projects

Capital subsidy to offset incremental cost Compensate energy penalty

Complement traditional project financing

It will motivate accelerated actions on other barriers put the CCSdemonstrations on the expected trajectory

It may incorporate smart incentive mechanisms to encourage earlymovers, higher rate for capture etc


18/19

18

Conclusions and Way Forward

CCS faces formidable challenges and barriers especially atits demonstration stage in developing countries

CCS will remain at high end of the risk spectrum of thetechnologies and requires targeted financing and incentives

Early demonstration through CCS demonstration fund indeveloping countries can accelerate its wider deployment

ADB analysis has brought forward some pertinent issueswithin the uncertainties of costs and technologies.

A follow on study can be commissioned to refine analysisand recommendations and present a preferred financingmechanism


19/19

19

For further details

[email protected]

ashok presentation at the cslf financign roundtable at singapore - 7 april 2011 clean

Documents