5 months ago

Climate Action 2010-2011

Energy and Mitigation

Energy and Mitigation rapidly to the developing world. This growth will require expanded international collaboration and financing for CCS demonstration in developing countries at an average annual level of US$1.5 to 2.5 billion from 2010 to 2020. To provide this funding, CCS needs to be approved in the Clean Development Mechanism (CDM) or an alternative financing mechanism; • CCS is more than a strategy for ‘clean coal’. CCS technology must also be adopted by many industrial sectors such as cement and iron and steel; • CO 2 capture technology is available today, but the associated costs need to be lowered and the technology still needs to be demonstrated at commercial scale; • CO 2 transport via pipeline has been proven; the challenge for the future of transport technology is to develop long-term strategies for CO 2 source clusters and CO 2 pipeline networks; • There is an urgent need to advance the state of global knowledge of CO 2 storage capacities. While depleted oil and gas fields are well-mapped and offer promising low-cost opportunities, deep saline formations are the most viable option for the long term. However, only a few regions have adequately mapped the CO 2 storage potential of these formations; • While some regions have made important progress in developing dedicated legal and regulatory frameworks for CCS, most countries still have issues to address before significant progress can be achieved; • Local communities have legitimate concerns about CCS that must be addressed. Governments need to take the lead on developing community-tailored CCS public engagement strategies, ensuring early provision of information about the costs and benefits of planned CCS projects compared to other GHG mitigation options. | 46 | CCS is needed, especially in the large emerging economies. Since the 2008 G8 recommendations and the 2009 International Energy Agency CCS Roadmap, the progress made has been visible but at the same time varying. Although the 2008 G8 goal of launching 20 large-scale CCS demonstration facilities by end of this year is unlikely to be met, significant progress has been made towards launching demonstration plants across the globe. A report by the International Energy Agency, the Carbon Sequestration Leadership Forum (CSLF), and the Global CCS Institute, presented to G8 leaders at their June 2010 Summit in Muskoka, Canada, provides analysis of the progress and points to the need for accelerated action by governments and industry. In the spring of 2010, the Global CCS Institute identified 80 large-scale integrated demonstration projects at various stages of development around the world, many of them having been initiated only during the past two years. These projects are located primarily in Europe, the US, Australia, Canada and Korea. Seven of the projects are in non-OECD countries: four in China, two in the Middle East and one (in operation) in Algeria. While this activity outside the OECD, where growth in fossil fuel demand is expected to be strongest, is promising, there is no room for complacency: largescale CCS development in non-OECD countries must accelerate if CCS is to deliver on its potential. Overall, around two-thirds of currently planned projects are in the power generation sector. Other industrial projects include those associated with the separation of CO 2 from natural gas. However, there are unfortunately a very limited number of projects related to the cement, aluminium and iron and steel industries. Clearly more projects need to be developed in these sectors, as CCS is often the only solution for them to achieve deep cuts in CO 2 emissions. According to the International Energy Agency roadmap, in 2050 up to 45 per cent of global CO 2 captured will come from sources other than power generation. Demonstration and deployment of CCS in industrial sectors is therefore critical. Some R&D and demonstration initiatives are underway, but we urge reinforced cooperation between industry and governments on demonstrating CCS on industrial applications. Governments making progress with CCS Significant progress has also been made by governments. Over the past two years, a number of governments and organisations (notably Australia, Canada, Japan, Norway, the Republic of Korea, the US and the EU), have committed substantial funding and are actively facilitating the deployment of large-scale CCS demonstration projects. They have to date announced support for 19 to 43 largescale integrated projects before 2020, with public funding commitments rising to between US$26.6 billion and US$36.1 billion. These commitments, however, are generally contingent on industry taking a full and active role. International Energy Agency analysis backs the general agreement that CCS is needed, especially in the large emerging economies such as Brazil, China, India, Indonesia and South-Africa. In these countries, progress has so far been mixed, with limited CCS activity in many of them to date, due mostly to lack of clear incentives and financial support. China, however, has made notable progress. In addition to extensive R&D activity, China has demonstrated CO 2 capture on two coal-fired power plants and has begun construction on the first phase of the GreenGen project, a three-phase project to demonstrate CCS on a commercialscale Integrated Gasification Combined Cycle (IGCC) plant. The potential for deploying CCS has been studied in Indonesia and projects are also being planned in Brazil, in addition to their active R&D programme. Launching concrete projects requires enabling legal frameworks. Much progress has been achieved in the legal and regulatory area. In the EU, the directive on the Geological Storage of CO 2 and the EU Emissions Trading Scheme directive provide a framework for legislation and regulation of CCS within the region. In Australia, comprehensive CCS legislation has been put in place at the federal level to cover offshore storage and, in a number of states, to cover it onshore. In the US, a number of states have implemented CCS legislation in parallel with ongoing work at the

Energy and Mitigation federal level by the Environmental Protection Agency. In addition, a number of other countries have begun the process of reviewing and amending legislation, including Canada, Japan and Norway. The first to establish legal frameworks have generally been OECD countries. It is now important that the large emerging economies start developing legal and regulatory frameworks. CCS – the challenges Despite significant progress towards launching demonstration and in establishing legal frameworks, significant challenges to CCS remain. The first concerns storage. Recent International Energy Agency analysis indicates that some 120 Gigatonnes (Gt) of CO 2 must be captured and stored globally over the next four decades – an indication of the storage capacities that need to be explored, characterised, licensed, safely operated and finally closed. The status and availability of data on CO 2 storage vary significantly around the world which is potentially a major constraint to rapid, widespread CCS deployment. In regions with the potential to store large volumes of CO 2 , a concerted effort is required to map and characterise suitable storage formations. This work should have a long-term perspective that takes into account expansion from demonstration to wider deployment. Several countries, including Australia, Canada, Japan, Mexico and the US, as well as the EU, have started to map storage potential and create storage capacity databases, in order to align CO 2 sources and storage sites. This work must however be accelerated. We see a strong role here for governments in the early stages: while the development and operation of storage sites are best left to industry, the mapping of storage potentials and capacities and characterisation of sites could well be led by government bodies. A second challenge concerns the forms of international CCS cooperation itself. While the G8 has facilitated discussions on CCS over the past five years and provided a forum for high-level political dialogue, its future as a regular energy discussion platform is uncertain, due to the everchanging nature of global economic and political issues. Will energy minister cooperation provide an alternative? The first Clean Energy Ministerial (CEM) meeting in July 2010 in Washington DC convened energy ministers and high-level ministry officials from 25 countries plus the European Commission to discuss low-carbon energy technology and policy, including issues surrounding CCS. The International Energy Agency supports this initiative and hopes that it can deliver political momentum to deal with key challenges not only for CCS, but for a range of clean energy technologies and policies. But by far the most important and fundamental challenge facing CCS is directly linked to the UN Climate Change conference in Cancun. Capturing and storing massive volumes of CO 2 will only become a profitable activity on a large scale if there is a globally adopted, verified and sanctioned agreement by which governments commit to binding cuts of CO 2 . Under the Copenhagen Accord, countries recognised that deep cuts in emissions are required, “so as to hold the increase in global temperature below 2 degrees Celsius”, but the Accord stopped short of actually delivering a binding agreement. We now look forward to negotiations resulting in such an agreement. While both OECD and non-OECD countries will have to take on differentiated targets and mechanisms, it is critical to ensure that CCS can be developed and deployed in all parts of the world in a cost-effective manner. Our analysis from the CCS Roadmap shows that very rapidly, just after 2020, over half of the large-scale projects should be developed in non-OECD countries. Therefore CCS must have a clear role in post-2012 climate change arrangements. Governments must maintain their efforts to ensure that CCS is not excluded from the incentive mechanisms under post-Kyoto arrangements. Without access to such mechanisms, it is unlikely that the deployment of CCS will expand at the pace required in developing countries. Effective incorporation of CCS in the Kyoto Protocol’s CDMs, and any subsequent mechanism, would represent an important first step. In summary, we must rapidly test and demonstrate CCS. Simultaneously, we must take steps to ensure deployment of CCS in OECD countries, and increasingly beyond the OECD. This calls for concerted action by industry and governments in all parts of the world. To halve our energy-related CO 2 emissions in the next four decades, a portfolio of solutions is required, ranging from energy efficiency, nuclear energy, renewables and CCS. We believe the world cannot costeffectively halve its CO 2 emissions without CCS. Nobuo Tanaka is Executive Director of the International Energy Agency and a former Director of Science, Technology and Industry at the OECD. He began his career in the Ministry of Economy, Trade and Industry (METI) in Tokyo before joining the OECD in 1989. In 1995, he returned to METI where he was Director General of the Multilateral Trade System Department in the Trade Policy Bureau. He has led Japan’s involvement with the International Energy Agency and has helped formulate both international strategy as well as domestic environment and energy policies for Japan in the Kyoto COP3 negotiations. The International Energy Agency is an intergovernmental organisation which acts as energy policy adviser to 28 member countries in their effort to ensure reliable, affordable and clean energy for their citizens. Founded during the oil crisis of 1973-74, the organisations initial role was to coordinate measures in times of oil supply emergencies. Its mandate has now broadened to incorporate the ‘three E’s’ of balanced energy policy making: energy security, economic development and environmental protection. Current work focuses on climate change policies, market reform, energy technology collaboration and outreach to the rest of the world, especially major energy consumers and producers such as China, India, Russia and the Organization of the Petroleum Exporting Countries (OPEC). Email: | 47 |