co2 storage crediting as a mechanism under the paris agreement
TRANSCRIPT
CO2 Storage Crediting as a Mechanism
under the Paris Agreement
Wolfgang Heidug
OGCI Expert Workshop, Paris, 14 - 15 October 2019
Milestones for CCS Policy
2005 2010 2015 2020
“Decision 10/CMP.7
Modalities and procedures for
carbon dioxide capture and
storage in geological
formations as a clean
development project activity”
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1. CCS economic in some circumstances, but not widely replicable
2. Climate policies do not adequately value the role of CCS as an option in avoiding dangerous climate change
Carbon pricing does not incentivize nascent, higher cost low-carbon technologies
Other low-carbon technologies benefit from supplemental subsidies alongside explicit or implicit carbon prices (e.g. renewables)
3. Commercial market for CCUS poses challenges
Demand-side policies place all the incentive on emitters
CCS also needs price signal for “storers”
Issues for CCS Today
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1. CCS economic in some circumstances, but not widely replicable
2. Climate policies do not adequately value the role of CCS as an option in avoiding dangerous climate change.
Carbon pricing does not incentivize nascent, higher cost low-carbon technologies
Other low-carbon technologies benefit from supplemental subsidies alongside explicit or implicit carbon prices (e.g. renewables)
3. Commercial market for CCUS poses challenges
Demand-side policies place all the incentive on emitters
CCS also needs price signal for “storers”
Issues for CCS Today → Solutions for CCS Today
Transformative support mechanism for CCS should seek to
address issues by being:
■ Widely applicable to a range of circumstances
■ Cognizant of the current maturity of CCS
■ Compatible with Paris Agreement architecture, mechanisms and
goals
■ Able to address commercial barriers to CCS deployment
■ Able to create a pathway to systematic long-term support for CCS
Carbon Storage Units Based Mechanism
CAPTURE
PENALTY
ACTUAL
EMISSIONStCO2
CSUs
DEMAND SIDE /
CONSUMPTION-BASED
SUPPLY SIDE /
PRODUCTION-BASED
Net-Zero Emissions (stock)
Em
issi
ons
Rem
oval
s
Reference
Emissions
Baseline
Stored
Emissions
Avoided
Emissions
CERsEmission Reductions
(Flow)
Net Zero Emission (Stock) CSUs
Advantages of Carbon Storage Units
tCO2
P2
P1
$/tCO2
CERs
CSUs
PHYSICAL CO2
price formation
($/tCO2)
CERs
CSUs
Address C-market failures Create physical C-market
Building Blocks of a Paris Agreement CCS framework
CONTRIBUTION
- Art 3 & 4 (NDCs)
COOPERATION
- Art. 6.1 (Deploy)
- Art 10 (Tech)
MECHANISM
- Art. 6.2 (ITMO)
- Art. 6.4 (SDM)
MARKET
- Results-based Fin
- Obligations
Carbon
Storage
Units
Deeper contributions
to emission reductions
“Club” with common
interests in CCUS
Systematic, long-term
support for CCUS
Nationally Determined Contributions (NDCs) cornerstone of Paris Agreement
“nationally determined” = latitude for countries to decide how they contribute
Contributions: Articles 3 & 4
Country NDCs with explicit
reference to CCS technology
Bahrain, China, Egypt, Iran,Iraq,
Malawi, Norway, Saudi Arabia, South Africa,
United Arab Emirates
Country NDCs listing CCS as a
source sector category
European Union*, Japan
Mexico, Montenegro
Countries not mentioning CCS
in NDC but with potential
interests
Australia 1 Brazil 1, 2 Canada 1, 2 Colombia 1
Indonesia 3 Malaysia 3 Russia 1South Korea 1
Thailand 3 Trinidad & Tobago 3 United States 1, 3 Vietnam 3
Notes: * 28 member state countries. 1 = Member Country of either CSLF, IEA Greenhouse Gas R&D Programme or Global CCS
Institute; 2 = active CCS pilot, demonstrator or large-scale plant(s) in operation. 3 = Significant energy sector emissions and
potential for low cost CCS from high purity sources.
In comparison with:
145 NDCs referring to renewable energy (109 with specific targets)
157 NDCs referring to AFOLU
10
31
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International cooperation can take a two-track approach:
1. DEPLOYMENT
Voluntary cooperation with transferable outcomes - Article 6
Driving Cooperation: Article 6 & 10
Establish “club” that act unilaterally outside of Paris Agreement but:
Guided by PA goals
Linked to PA mechanisms
Measurable in PA transparency framework / “MPGs”
Establish mechanism to unify common interests:
Focus on finance and incentives to drive deployment
Single metric or unit that provides systematic support for CCUS
2. DEVELOPMENT, TRANSFER, CAPACITY BUILDING
Technology mechanism - Article 10
Evolution of CSU Mechanism
Results-based finance
Procure CSUs & disburse to club members.
Price set according to:
Technology
Costs
Other finance sources
Club priorities
REV
IEW
Emission-based policies
Carbon pricing instruments
Supply-based policies
Supplier pledges/obligation
Decarbonized oil sales
PILOT PHASE SYSTEMATIC DEMAND
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www.kapsarc.org/research/publica
tions/a-mechanism-for-ccs-in-the-
post-paris-era/
Thank you for
listening tomy presentation