A New Sector Mechanism for Clean Coal Technologies in a Carbon Constrained World

Abstract

Coal is inexpensive, plentiful and will continue to play a major role in the global energy system for the foreseeable future with currently 40% of the world’s electricity generated by coal. Climate change mitigation policies and measures will also continue to place stricter caps on emission of greenhouse gases. This paper is based on two IEA Clean Coal Centre reports that analyze what role clean coal technologies (CCTs) can play in a world where carbon emissions are constrained. The paper analyses economic instruments that could accelerate the implementation of CCTs. The paper’s technical focus is on carbon capture and storage (CCS) technologies. From a scenario analysis involving major world regions it appears that CCT technologies have a significant potential for climate change mitigation. The paper puts forward the premise that for CCTs the Kyoto Protocol and emissions trading has failed to fulfil this potential. The role and design of emission trading schemes is critical in encouraging CCTs implementation. The current post-2012 climate policy regime proposals involving CCS are unlikely to encourage rapid deployment of CCTs. A separate technology agreement specifically targeting CCTs is also put forward in this paper as another option to accelerate the implementation of CCTs and in particular CCS.