In a guide to policy makers on carbon capture and storage (CCS) for fossil and biofuels, the IEA argues that policy for CCS needs to be both flexible over time and predictable enough to enhance investor confidence.
The report analyzes how policy frameworks and instruments should evolve over time as CCS technology matures, and which sectors provide the best opportunities for demonstration projects.
January 2012: The International Energy Agency (IEA) has released a report titled “A Policy Strategy for Carbon Capture and Storage,” which serves as a guide to policy makers to support the development of national and international policy on carbon capture and storage (CCS), both conventional fossil fuel CCS and bioenergy with CCS (BECCS).
The report argues that policy support is particularly important for CCS because, compared to other low-carbon technologies, it generates no revenue or market benefits as long as there is no price on CO2 emissions. To that effect, the report outlines suggestions for both an overall policy framework and specific policy instruments. It states that the appropriate policy framework for CCS should evolve as the technology matures, moving from: technology-specific to technology-neutral support; supporting capital deployment and operations to only incentivizing operations; an approach where costs and risks are shared by the private and public sector to one where costs and risks are borne primarily by the private sector; and subsidizing abatement to penalizing emissions.
Regarding policy instruments, the report advises developed countries to move from grant-based support to quantity instruments (such as a portfolio standard), while developing countries could benefit from a longer use of grant-based policies. The report further analyzes the sectors that provide the best opportunities for learning from demonstration projects. Sectors with low trade exposure, low CCS costs and high CO2 emissions, and those industries that create a CO2 stream as a result of existing production processes, provide the best venues for learning, the report suggests. Such sectors include the natural gas processing, sugar fermentation and some chemical industries.
The report also analyzes BECCS, which offers the potential to both reduce and remove CO2 from the atmosphere. The report argues that BECCS can only be effective when combined with updated accounting policies and methods to account for emissions from land-use change. [Publication: A Policy Strategy for Carbon Capture and Storage]