How CCS Policy and Regulations Influence the Business Risk of CCS Projects

Abstract

The relation between CCS policy and regulatory frameworks with the business risk of CCS projects was examined based on expert and potential stakeholder interviews and economic feasibility evaluation including cash flow analyses of a hypothetical CCS project. We found some significant business risks can be mitigated or enhanced by policy and regulation changes. The largest risk for CCS projects where the revenue relies on carbon price is the instability of carbon price policy. A stable revenue scheme of CO2 emission reduction supported by a legal and regulatory framework is the most important factor to reduce business risk. Also, CCS policy such as emission performance standards to promote CCS projects which do not rely on a carbon price is an option to reduce the business risk of CCS through policy and a regulatory framework. Since CO2 seepage monitoring requirements of CCS permits is a source of business risk to induce misdetection of CO2 seepage, realistic and practical requirements may need to be developed. Business risks derived from low infectivity of CO2 into geological reservoirs can be mitigated by flexible injection permits. The study results imply the necessity for the development of a policy and regulatory framework as experience in CCS projects is accumulated over time.