Major Policy Intervention Required to Boost Carbon Capture Potential

A World Resources Institute (WRI) analysis of the complex challenges that investors would face when deploying carbon capture and storage (CCS) technologies shows that until government policies support large-scale demonstrations it is unlikely that CCS will be able to fulfill its potential in combating climate change.

Carbon capture and storage, the process whereby carbon dioxide from a coal-fired power plant is injected deep underground to prevent it from entering the atmosphere and contributing to climate change, could play a significant role in reducing greenhouse gas emissions while allowing for the continued use of coal as an energy source. Coal is one of the cheapest fuels for power generation, and its affordability and large domestic reserves make it likely to remain so for some time.

However, using CCS technologies to inject carbon dioxide from coal combustion into underground formations will require solutions to a host of technical, regulatory and financial challenges, according to the analysis.

The analysis shows that if these challenges are to be overcome in a timeframe for CCS to play a meaningful role in the fight against climate change, not only must there be a price on carbon that is high enough to make CCS technologies cost-competitive, but there must also be immediate government intervention in the form of support for large-scale demonstration plants far beyond current efforts.

The full analysis is detailed in the WRI report Capturing King Coal: Deploying Carbon Capture and Storage Systems in the U.S. at Scale, released today.

“Unless we can put a price on carbon and push these new technologies into the market with additional incentives CCS won’t arrive in time,” said Dr. Jonathan Pershing, director of WRI’s climate, energy and pollution program. “We need to deploy the technology as quickly as possible - and that in turn means paying for large scale demonstrations and infrastructure, and creating a regulatory environment that provides public confidence in the safety and environmental integrity of the technology.”

The report points to the need for rapid progress in the technological, regulatory, financial and policy fronts for CCS to become a solution to climate change.

The technological challenges facing CCS are focused around developing several different technologies at differing levels of maturity that will have to operate in concert for the process to work on a large scale.

On the regulatory front, WRI has engaged a diverse set of stakeholders to develop guidelines for CCS. This effort is taking place in the context of rapid changes in the policy arena, as the U.S. EPA has initiated a process to develop regulations governing the underground injection of CO2 for sequestration. The WRI guideline project provides a transparent forum for communication of best practices and regulatory recommendations for carbon capture, CO2 transportation and underground sequestration to a broad array of stakeholders. The expected release of the WRI CCS guidelines is this fall, and today a group of CCS experts convened to discuss key technical issues.

Both the King Coal report and the guideline effort frame key issues around long-term liability for underground sites where carbon dioxide will be stored. Since the gas must stay underground for centuries, there must be clear guidelines for liability from leakage 100 years or more into the future.

Unique financial and investment challenges will also have to be overcome in order to create a CCS infrastructure in the U.S. In addition to the large capital investment that will be required, a more immediate concern is that construction firms, already facing rising costs, may be reluctant to extend performance guarantees to coal plants built with untested technology.

“All of these are intimidating challenges, but if we get some steel in the ground and some demonstration plants running, the investment community will follow,” said Hiranya Fernando, a senior associate at WRI and one of the authors of the report.