27 November 2015
Delivering Carbon Capture and Storage: a 2°C Solution
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For the first time in history, business is playing an active role in this transformational journey and is coming to Paris with concrete solutions to help governments in tackling climate change.

Over the coming days, world leaders will be meeting in Paris to negotiate a global climate agreement. For the first time in history, business is playing an active role in this transformational journey and is coming to Paris with concrete solutions to help governments in tackling climate change.

Guided by the science-based principle of net zero emissions within this century, we need to transform our economies and societies worldwide to limit warming of the climate system. This transformation requires government actions to be supported by innovative low carbon technologies at scale. With COP21 at our doorstep, this is a good time to look at the solutions proposed by business.

Meeting the climate challenge requires leadership, action and unprecedented collaboration. At the WBCSD, we are proud to be leading the Low Carbon Technology Partnerships initiative (LCTPi), which incorporates these three components. Bringing together over 140 companies and 50 partners, LCTPi analyses barriers and identifies solutions, financial requirements, policies and public-private partnership opportunities to scale up low carbon technology solutions.

LCTPi focuses on nine solution areas, one of which is carbon capture and storage (CCS). A large array of technologies will be needed to reshape the energy system over the coming decades. Yet, the expected ongoing use of fossil fuels and related emissions from sectors such as transport or cement underlines the need for CCS to deliver a net-zero outcome. Lowering the carbon footprint of industry, efficiency improvements and deployment of renewable energy fall short of delivering this result making CCS an indispensable solution for a 2°C pathway.

Deploying CCS at very large scale during this century requires a clear, long term economic driver to trigger investment. Conventional wisdom argues for a straight carbon price, but experience shows that not all carbon pricing policy frameworks are operating with sufficient price development or long term certainty to support extensive project activity. Not surprisingly, only a handful of large scale capture and storage facilities have appeared so far despite the maturity of CCS technology.

To date, individual CCS projects have largely relied on a combination of major capital grants from government to underpin construction costs and access to a modest price on carbon for ongoing commercial viability. But large-scale deployment cannot sustainably proceed on the back of such grants. CCS deployment needs to be driven by a more fit for purpose approach.

A mechanism that specifically rewards capture and storage of CO2 is instrumental for CCS deployment. The LCTPi on CCS proposes to establish such a mechanism. A newly designed carbon credit (Zero Emission Credit, ZEC) would be granted to a CCS project for each tonne of CO2 that is captured and stored. As a CER originally did under the Clean Development Mechanism (CDM), the ZEC would in turn provide a revenue stream for the project. Until the ZEC is widely recognized, LCTPi recommends a prototype fund to act as a buyer of such credits, thereby driving early demand. The fund would be capitalized by modest investments from many business, governments, foundations and even individuals; in effect a multi-lateral, multi-sector crowd funding approach.

This approach brings CCS down the technology cost curve through a modest investment by the many actors who have an interest in making CCS available at an accessible cost. In effect, the first mover disadvantage is shared rather than taken on only by a handful of companies or governments.

The concept of a Zero Emissions Credit allows for a gradual shift to increased CCS deployment. A long term (i.e. 2030s and beyond) objective would be to gain recognition of ZECs as compliance credits. Throughout the century, this would potentially drive transition to a global emissions management system based on emissions stored only.

Early on, when just a fraction of emissions are stored, the average cost of mitigation across all CO2 emitted will be modest. While the price impact of a credit driven approach must trend towards the required CO2 price for CCS deployment, it will take many years to get there. This would give emitters much longer to accommodate the change allowing time for costs to fall as learning, experience and infrastructure development proceeds.

This proposal represents one of several solutions being developed under the umbrella of the LCTPi. In Paris, we will be calling on all stakeholders – businesses, governments and society – to collaborate to accelerate the transition to the low carbon economy that is urgently needed.

Paris is where the essence of our work begins: implementing and scaling up low carbon solutions.

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