The Global CCS Institute has today launched a new report exploring how to stimulate investment in carbon capture and storage (CCS).
The institute’s report reviews the progress achieved until now and identifies the policies and commercial conditions that enabled investment in the 18 large-scale CCS facilities currently in operation, and the additional five that are under construction.
The report also identifies overarching barriers to CCS deployment including market and information failures, which the recent projects had to overcome.
Based on an assessment of existing CCS projects, the Global CCS Institute found that several of these facilities have common features, most built with grant support and relying on revenue from enhanced oil recovery. Others, in particular those in the United States, relied on tax credits, or the regulation of carbon emissions, in the case of the Gorgon project in Australia.
The paper also highlights that the cost of CCS is closely linked to the number of CCS facilities in operation and that it will continue to fall as new projects come online due to economies of scale and learning by doing.
Despite some progress in the deployment of CCS, the current policy environment will not suffice to stimulate the scale-up of the technology to deliver the number of projects needed to meet the Paris targets.
The paper reveals a policy framework that will enable the scaling up of CCS deployment, one that must focus on de-risking investments, creating new business models around shared transport and storage networks and long-term storage liability management.
To achieve this, governments will have an important role to play. The report also found that debt financing will be an essential asset for future projects. To accelerate project development, banks will have to provide access to affordable debt financing to CCS project developers.
The paper also examines the eventual progression from high cost debt financing to the mitigation of risks that will result in the reduction of the cost of debt for future CCS projects.
Finally, the report puts forward a set of key recommendations that will create an enabling policy environment to accelerate the deployment of CCS: