With the approval of rules on the inclusion of carbon capture and storage allocations at the Durban climate talks that just concluded, a potentially huge carbon capture and storage (CCS) industry is created.
The Saudis have asked for years for CCS to be included (as one of the possible emission reduction technologies available) in cap and trade markets and last year at Cancun – they got it.
Now Durban has taken that a step further and laid the groundwork with a draft set of rules for the inclusion of CCS in the Clean Development Mechanism (CDM), bringing it into the cap and trade carbon market; opening up the possibility that investing in CCS will finally become economically viable.
Durban ended surprisingly successfully with the first ever global deal, that will be law by 2020, and over the next 3 years, the deal particulars are to be worked out, while Kyoto will continue for 35 to 40 nations (some new ones, some dropouts) into a second commitment period.
With the prospect of the international climate law by 2020, investment in all renewables globally is likely to increase over the next 8 years, in the same way that it has done in advance of other carbon markets.
In the 7 years preceding the California cap and trade market for 2013 renewable development increased – as it did in the 7 years preceding the 2005 beginning of the EU’s Emissions Trading Scheme. In fact, the EU had actually overshot their targets by 2008, because investment in renewables actually began in 1997, with the signing of the Kyoto Protocol.
For this new global carbon market that is to take force in 8 years in 2020, the inclusion of CCS means that it will likely see increased investment now for the first time (along with increased renewable investment) over these next 8 years.
The US now leads the world in carbon capture projects, with two operational CCS projects, 6 more in planning, and research under way on 27 more. European nations have 22, all in the planning stage. Of the BASIC nations, only China has acted – with 2 in planning, but fossil energy driven Canada and Australia have 4 and 3 planned respectively. New Zealand has 1. Saudi Arabia has none.
“There has been good progress in the last week on CCS in CDM” says Benjamin Sporton, WCA Policy Director, on the World Coal Association Blog. “Negotiators have been working very hard on this issue with five meetings being held in one day and one meeting lasting until 4.00am on Saturday morning!”
“A text has now been agreed by the SBSTA that deals with most of the issues and concerns that were outlined in last year’s decision in Cancun. In fact there is only one issue left to be addressed, which is how to deal with climate liabilities should there be leakage at a storage site.”
Leakage risk was resolved in the plan agreed on at Durban for carbon capture:
Because of the considerable uncertainty about their yet unproven efficacy, CCS developers will have to put 5% of the credits earned in reserve so they will be awarded only after 20 years, provided that no carbon dioxide has leaked from the underground storage.
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