CIAB Market & Policy developments 2005/06 - IEA

non-commercial CCS could be demonstrated at large scale by 2014, with commercial
operation achieved between 2016 and 2020. These remain challenging targets that can
only be achieved if the urgency expressed by some spreads to become a demand of the
majority. Experienced practitioners warned that the remaining technical, economic,
policy, regulatory and legal issues must be addressed simultaneously and with
determination. In particular, proving the safe storage potential for CO 2 is as urgent as
demonstrating the capture technologies and potentially as challenging as developing
major oil and gas fields.
25. Failure to succeed with CCS would force painful and perhaps unmanageable policy
choices between pursuing energy security and addressing climate change. In this
respect, CCS emerges as an indispensable part of the solution.
26. There is strong coal industry awareness of the importance of applying sustainable
development principles to maximise business opportunities and to comply with
government policies and regulations. But investments in technology to reduce the impact
of coal use on climate change are accompanied by significant risks associated with
uncertainty about the ability to capture economic value, large capital requirements, long
development times and the potential for failure with any given new technology.
27. Similarly, coal producers continue to be wary of investing in advance of a demonstrated
demand for coal; a particular issue for European markets where prospects for coal in the
longer-term are especially uncertain. Investment has increased as coal prices have
risen, but to date it has been mainly operational and transportation investment rather
than capacity investment in long term coal production.
28. Governments are increasingly recognising the need to set long term targets for CO 2
emissions reductions; and for the need to set a value on CO 2 emissions. But, while cap
and trade systems encourage the efficient use of existing mechanisms to reduce CO 2
emissions from fossil fuel use, they provide imperfect signals for long term investment.
29. Demonstration of emerging clean coal technology options at a size large enough to give
some confidence on their use at commercial levels remains an urgent priority. Until these
technologies are demonstrated at large scale, the massive investments by developing
economies in new coal-fired electricity generating plant are not achieving their potential
for mitigating CO 2 emissions from the use of coal.
30. Many global industry and government initiatives have emerged, including the G8 climate
change agenda, the Carbon Sequestration Leadership Forum (CSLF), the Asia Pacific
Partnership for Clean Development and Climate and the European Technology Platform
for Zero Emission Fossil Fuel Power Plants. In some cases these have encouraged the
development of national initiatives, such as the R&D funding provided by the Australian
federal government’s Low Emissions Technology Demonstration Fund and the Australian
Coal Association’s Coal 21 Fund, that provide substantial R&D support funding. The coal
industry has demonstrated that it is willing to invest large sums of money in the clean
coal technology R&D effort and these developments are to be applauded.
31. Beyond R&D, joint industry/government co-operation to demonstrate new low CO 2
emission technologies and to formulate policy frameworks that encourage investment in
efficient coal-fired electricity generation technologies is essential if the goal of cleaner
use of fossil energy is to be achieved within the necessary timescale.
32. FutureGen in the USA and the recent Callide A Oxy-fuel demonstration in Australia are
examples of the sort of demonstration projects that need to be actively pursued
elsewhere.
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