Financing carbon capture and storage projects the results of two expert meetings

Abstract

Abstract The IEA 2007 World Energy Outlook forecasts that fossil fuels will continue to dominate the energy mix until 2030, including large economies such as the EU, Japan, US and China. A growing concern among many countries is the design o f mechanism s that will finance clean coal technologies and in particular carbon capture and storage projects. To illustrate, it is estimated that the United States will require 170 GW of new coal -fired capacity prior to 2030 with 90% of that being post 2015. Therefore substantial government and private investment into carbon capture and storage (CCS ) projects will be required and m echanisms designed to facilitate that investment. Many organizations are examining this issue including the IEA Clean Coal Centre, IEA Greenhouse Gas R&D Programme, Clean Coal Power Initiative and the Carbon Sequestration Leadership Forum (CSLF). In 2007 and 2008 two expert meetings on financing post-demonstration CCS projects were organised in London and New York by the IEA Greenhouse Gas R&D Programme and the IEA Clean Coal Centre, with the support of the World Coal Institute and sponsorship from Chevr on and Rio Tinto. This paper reports back the results of those meetings in regard to identifying the key drivers for financing post-demonstration CCS projects in Europe and North America. This is of particular interest with the restructuring of the USA Fut ureGen Programme as well as the proposed inclusion of CCS within the European Union Emissions Trading Scheme (EU-ETS) in the future. Different options for financing such projects are explored and compared with a focus on how they could assist in the realisation of commercial CCS projects. In addition, this paper examines the response by the insurance, banking and other financial sectors to the potential investment opportunities CCS projects could provide in dealing with issues such as liability and project investment. Lastly, the paper analyses the knowledge and awareness of CCS technology within the financial community in general.