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Title:
Potential impacts of CCS on the CDM
 
Author(s):
 
Published by: Publication date:
ECN Policy Studies 26-4-2011
 
ECN report number: Document type:
ECN-O--11-033 Other
 
Number of pages: Full text:
35 Download PDF  (745kB)

Abstract:
CO2 capture and storage can ensure that stringent climate change mitigation targets are achieved more cost-effectively. However, in order to ensure a substantial role for CCS, deployment of CCS is required on a significant global scale by 2020. Currently, the CDM is the only international instrument that could provide a financial incentive for CCS in developing countries. In December 2010 it was decided that CCS could in principle be eligible under the CDM, provided a number of issues are resolved, including non-permanence, liability, monitoring and potential perverse outcomes. The latter issue relates to the concern that that CCS projects could flood the CDM market, thereby crowding out other technologies that could be considered more sustainable. This report, therefore, aims to quantify the possible impact of CCS on the CDM market, in order to assess the relevance of the CDM market objection. However, the analysis in the report is also valid for the role of CCS in other types of international support mechanisms. The first result of this study is a marginal abatement cost curve (MAC) for CCS in developing countries for 2020. Based on existing MAC studies, the IEA CCS Roadmap and an overview of ongoing and planned CCS activities, we compiled three scenarios for CCS in the power, industry and upstream sector, as shown below. The major part of the potential below $30/tCO2eq (70 – 100 MtCO2/yr) is in the natural gas processing sector. Using the MACs for the CDM market, we estimate the economic potential for CCS projects to be 4-19% of the CDM credit supply in 2020. The potential impact inclusion of CCS in the CDM may have is assessed by using several possible CER supply and demand scenarios, as well as scenarios related to market price responsiveness and the role of CDM in the post-2012 carbon market. The impact is estimated to be between $ 0 and $ 4 per tonne of CO2-eq, with three out of four scenarios indicating the lower part of this range.

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