TABLE OF CONTENTS
List of Figures
List of Abbreviations
2. Theoretical Background
2.2 Paris Agreement
3. Possibilities to promote CCS under the UNFCCC
3.1 Market mechanisms: CDM and NMM
3.1.1 Inclusion of CCS in CDM
3.1.2 Problems with developing CCS projects under the CDM
3.1.3 Improvements on the CDM by creating a NMM
3.2 Non-market mechanisms
3.2.2 Green Climate Fund
4. Opportunities and challenges
4.1 The Economics of CCS
4.2 Policies - INDCs
4.3 Legal liability
5. Recommendations and Conclusions
The aim of this thesis is to determine what changes need to be made for Carbon Capture and Storage to be used to reach the goals of the new Agreement under the United Nations Framework Convention on Climate Change. Research focused on secondary literature, mainly scientific papers. By comparing different sources, it was possible to understand the current scenario on the topic. Other than most papers, this one analyzes various UNFCCC mechanisms with the main focus being the future of the market mechanism and the possibilities the New Market Mechanism will mean for CCS.
They key finding are that although CCS could be helpful and even crucial in achieving the goals set in the Paris Agreement in 2015, the international community will need to act quickly for this to happen. It is essential for policy makers to decide on the precise nature the UNFCCC mechanisms will have in the near future for countries to have time to prepare and develop their CCS frameworks accordingly.
Keywords: CCS, UNFCCC, CDM, NMM, Paris Agreement
LIST OF FIGURES
Figure 1: Overview of CCS technologies (Kuckshinrichs und Hake, 2015)
Figure 2: Cumulative spending on CCS projects (International Center for Climate Governance, 2016)
Figure 3: Priority areas for implementation highlighted in the intended nationally determined contributions (IEA Greenhouse Gas R&D Programme, 2015)
LIST OF ABBREVIATIONS
illustration not visible in this excerpt
The international community still has the possibility to stop the worst effects of climate change and limit greenhouse gas emissions. The International Energy Agency wrote in their yearly Energy Technology Perspectives briefing that in order to achieve the 2DS1 “the annual rate of reduction in global energy intensity needs to more than double - from the 1-1 % per year today to 2.6 % by 2050” (IEA, 2015). According to the IEA, even popular technologies such as electric vehicles and some types of renewable energies are not on track in order to accomplish the 2°C targets (IEA, 2015).
Carbon Capture and Storage is seen by many as unsafe and not necessary, but by others as the only chance to meet the 2DS. While it is true that when comparing CCS to other technologies the investment costs are higher and the monitoring process much more extensive and complicated, it could prove to be an important instrument in bridging the gap between the fossil fuel era and the renewable energies era.
In order to implement CCS technologies on a larger scale worldwide, international support is needed, which is where the United Framework Convention on Climate Change and its mechanisms for clean energy projects come in. Until now, the Clean Development Mechanism has been the primary mechanism and while it is true that it has had success with other types of project activities, it hasn’t had the expected impact on the CCS scenario. With the Paris Agreement, the UNFCCC mechanisms will be newly developed, which is an opportunity to learn from the CDM’s mistakes and correct them.
This is why this paper will explore how Carbon Capture and Storage can be used to mitigate the impacts on climate change in order to achieve the goals of the Paris Agreement, all of this within the frame of the UNFCCC and its mechanisms (past and future). To answer this complicated question, the following three questions will be discussed:
- What is CCS and how does it contribute to climate change mitigation?
- What mechanisms exist under the Kyoto Protocol and what will happen after 2020 when the Paris Agreement enters into force?
- What are the goals of the Paris Agreement? What possibilities are there to promote CCS under UNFCCC market and non-market mechanisms? These questions will serve as a thread throughout the entire paper.
First, the basics of Carbon Capture and Storage as well as the most important statements of the Paris Agreement will be introduced for the reader to have the necessary theoretical background. Then the mechanisms under the UNFCCC will be analyzed and discussed starting with the market mechanisms, the Clean Development Mechanism and the New Market Mechanism and followed by the nonmarket mechanisms and approaches, the Framework for Various Approaches and the Green Climate Fund. The mechanisms will be placed in the context of the CCS technologies. After that, other issues of international importance affecting the technology will be discussed, namely funding, policies and liability. Finally, with the analysis and discussion as a basis, several recommendations regarding next steps will be made.
Discussions on the future mechanisms under the UNFCCC are still happening and there are several suggestions from governments and organizations on the subject. This paper will analyze the proposals submitted and discuss on how the mechanisms should be structured and how they should function.
Because this is a current topic about only a few books have been written, research for this thesis included mostly scientific papers and briefings from reliable organizations such as the International Energy Agency, the Global CCS Institute, the UNFCCC itself, and the World Bank, among others. Due to the nature of the subjects, there are no primary research sources, e.g. interviews or surveys, but rather secondary sources, such as the ones mentioned above. The main challenge while conducting the research was finding the most recent sources, especially when it came to documents elaborated by the UNFCCC.
2. THEORETICAL BACKGROUND
A large part of the global CO2 emissions is caused by coal-fired power plants, which is why Carbon Capture Technologies are seen as an alternative to make this type of power stations cleaner. At the moment, research on CCS is concentrating on developing applications for coal power plants, but the technology is also being used in other fields such as enhanced oil recovery, natural gas extraction and different industrial processes. Possible industrial applications include steel and iron production as well as the manufacturing of cement and ammonia (Kuckshinrichs, Hake, 2015).
At present, the three most widely used technologies are the post-combustion, precombustion and Oxyfuel process. The second generation of these processes are currently being developed and are supposed to be more efficient and to offer a faster return on investment. To allow a better understanding of the paper, the three basic CCS technologies will subsequently be explained briefly. For a schematic overview see Figure 1.
illustration not visible in this excerpt
Fig. 1: Overview of CCS technologies (Kuckshinrichs und Hake 2015).
In the post-combustion process, the carbon dioxide is captured after the combustion process. The basic procedure includes the following steps: Absorption of the CO2 in the gas with an adequate solvent, change in temperature or pressure to force the desorption of the carbon dioxide and finally treatment and compression of the CO2 to make it suitable for transport and storage. The last step is common to the three basic processes, as the carbon dioxide always has to undergo similar steps to be ready for transport and storage. The pre-combustion process is used in IGCC or integrated gasification combines cycle plants. These power plants treat materials such as coal and convert it into a raw gas. Here, the CO2 capture takes place before the generation of electricity. First, the carbon monoxide is converted into carbon dioxide in a process called CO shift. Then, the CO2 is separated from the H2 and treated further for transport and storage. Finally, the remaining hydrogen is used to generate power in a steam process. In the Oxyfuel process, the fuel is burned in a mixture of pure oxygen and recirculated gas, resulting in a gas with a high concentration of CO2. After treatment, the flue gas consists mainly of carbon dioxide and steam. The gas is then cooled until the steam condenses, leaving a gas rich in CO2 behind, which can be transported and stored (Kuckshinrichs, Hake, 2015).
A retrofit, meaning the modification of an existing power plant, is only possible for the post-combustion process. For the pre-combustion and the Oxyfuel technologies it is necessary to build a new plant, which means higher investment costs (Kuckshinrichs, Hake, 2015).
After the carbon dioxide is captured it has to be transported to a storage site, which normally occurs with the use of a pipeline or ship. For the storage itself there are three options: saline aquifers, depleted oil and gas reservoirs and deep coal seams (Fischedick et al. 2015).
There is certainly more to explain about the CCS technologies, such as the second generation of each technology and the advantages and disadvantages, as well as the applications for industrial processes, but because this is not the main topic of this paper, the technical aspects of CCS will not be further discussed.
2.2 PARIS AGREEMENT
The Paris Agreement was adopted on 12th December 2015. It is a historical agreement because it expects all countries to make reductions in their emissions, not just developed parties. Negotiations for the agreement took 6 years and finally decisions had to be made because the Kyoto Protocol will not be valid after 2020. The main goal is to keep the increase in global average temperature below 2°C compared to pre-industrial averages, while the more ambitious goal is to limit the increase to 1.5°C (Article 2.1, Paris Agreement, 2015). To achieve this goal all participating countries have to formulate challenging targets that are in tune with the agreement’s objectives (Climate Focus, 2015).
The main idea behind the Paris Agreement is to create a legal framework to “strengthen the global response to the threat of climate change” (Art. 2.1, Paris Agreement, 2015). Countries will communicate their individual goals in so-called Nationally Determined Contributions or NDCs, which will be updated at least every five years (Art. 4, Paris Agreement, 2015). The parties to the agreement submitted their INDCs or Intended Nationally Determined Contributions before the COP 21, where the agreement was decided upon. Unlike in the previous agreement - the Kyoto Protocol -, the focus does not lie on specific emission targets but rather on processes and on “progressively more ambitious mitigation contributions” (Climate Focus, 2015).
As previously mentioned, under the new agreement all parties will contribute to climate change mitigation and adaptation. However, the Agreement will still “reflect equity and the principle of common but differentiated responsibilities and respective capabilities” (Art. 2.2, Paris Agreement, 2015), meaning that countries will have to act depending on their capabilities and circumstances. Therefore, developed parties should have more ambitious NDCs, help developing countries reach their goals (Art. 3, Paris Agreement, 2015) and provide financial assistance (Art. 9, Paris Agreement, 2015). Furthermore, the Paris Agreement allows for parties to “pursue voluntary cooperation in the implementation of their nationally determined contributions” (Art. 6, Paris Agreement, 2015) and stipulates the creation of a “mechanism to contribute to the mitigation of greenhouse gas emissions” (Art. 6.4, Paris Agreement, 2015). The exact nature of this mechanism(s) has not been defined yet and the possibilities will be discussed in chapter 3 of this paper.
Climate change adaptation has gained more importance under the new agreement:
“Parties [to the Agreement] recognize that adaptation is a global challenge faced by all (…) and that it is a key component of and makes a contribution to the long-term global response to climate change” (Art. 7, Paris Agreement, 2015). The issue of transparency is also tackled, forcing all parties to the Agreement to provide information on sources of anthropogenic emissions, and developing countries to provide a report on the support received from developed countries, among others (Art. 13, Paris Agreement, 2015).
All in all, the Paris Agreement establishes a framework for climate change mitigation and adaptation that will guide cooperative action beyond 2020 and serve as a replacement for the Kyoto Protocol (Climate Focus, 2015).
3. POSSIBILITIES TO PROMOTE CCS UNDER THE UNFCCC
CCS projects require high investment costs, which means that in order for more of these to be built in developing countries, these must be willing to invest in the corresponding technology. Private investments play an important role in the development of CCS projects and will continue to do so, but the UNFCCC and its mechanisms could be crucial for large-scale CCS projects in the future.
Article 6 of the Paris Agreement stipulates the creation of a mechanism to help reduce greenhouse gas emissions and also refers to a non-market mechanism. The exact nature of these mechanisms isn’t defined in the Agreement, but there is more information referring to it in the Decision 1/CP.21. Regarding a market mechanism, the document states that, among others, the mechanism must be created on the basis of “verification and certification of emissions reductions resulting from mitigation activities (…)” (UNFCCC, 2015) and of experience gained with existing mechanisms. On the topic of a non-market mechanism, the Decision refers to a “framework for non-market approaches” (UNFCCC, 2015) that undertakes projects in the field of sustainable development. Furthermore, the Green Climate Fund is referred to as a tool to support the least developed parties and other developing countries (UNFCCC 2015). There are other UNFCCC mechanisms such as Technology Transfer and Joint Implementation that won’t be discussed in this paper. It is important to note that the mechanisms that will be analyzed and discussed in the next chapters may overlap and there is no final decision on how they will complement each other after 2020.
3.1 MARKET MECHANISMS: CDM AND NMM
Under the Kyoto Protocol, the market mechanism has been the Clean Development Mechanism, also referred to as CDM, the first program of its type. The CDM is a global investment and credit mechanism with the purpose of encouraging environmental project activities in developing countries. The market mechanism functions by providing a standardized emissions offset instrument that works with certified emission reduction credits or CER, each credit equating to one tonne of CO2 (Dixon et al. 2013). For the CDM to work effectively, specific rules are necessary for it to be possible to compare the results of different project activities. The emissions reductions are calculated with the use of a baseline, which indicates what the scenario would be without the existence of the project (Global CCS Institute, 2011). In the example of a CCS project in a power plant, the baseline emissions would be the amount of CO2 coming from the plant that would reach the atmosphere if there were no carbon capture technology.
By funding a project in the framework of CDM a country can reach its emissions reduction targets with projects outside their territories. Furthermore, countries or companies that are below their commitment targets can sell their remaining CERs to countries or companies that are above their targets. Because it is a market mechanism, the credit’s price changes depending on the demand. This means that the implementation of a project in the framework of the CDM is dependent upon the investment costs in relation to the price of the certified emission reduction credits (Dixon et al. 2013).
With the entry into force of the Paris Agreement, a new international agreement will come into place. This time all parties will have obligations, so in order to account for the differences with the Kyoto Protocol, it is necessary to create a NMM or New Market Mechanism that will work starting 2020. The NMM will in all likelihood “provide the basis for financing emission mitigation projects and programs in developing countries” (International Energy Agency, 2014) and its main goal will be to “meet standards that deliver real, permanent, additional and verified mitigation outcomes” as well as to avoid the double counting of emission reductions and achieve a net decrease in those emissions (Michaelowa, 2012).
3.1.1 Inclusion of CCS in CDM
Decisions in the UNFCCC and with that on the CDM are made by consensus, the same being so with the decision to include CCS as a CDM project activity (Bakker et al. 2009). Opponents to the technology argue that CCS is still too uncertain, and that allowing it as part of the CDM would make the developing countries hosting the projects test subjects. The main argument is that issues such as site monitoring, leakage and liability are still unanswered in industrialized countries (Bächstrand et al. 2011). The long discussions on the topics showed that most developing countries have a low level of awareness and knowledge on the subject, which made the path towards CCS being part of the CDM that much harder (Bakker et al. 2009).
The discussions first started in 2005 at the meeting of the executive board of the clean development mechanism. The issue was considered but the board could not reach an agreement due to the uncertainty of the technology as well as problems that could arise because of project boundary and leakage. The executive board then asked for input from the parties to the Kyoto Protocol and in 2006 received several methodology proposals which were deemed inadequate. Several questions still had to be addressed, such as site selection, monitoring methods and liability frameworks. Thereafter multiple meetings, workshops and negotiations took place which culminated in the UNFCCC draft on modalities and procedures for CCS projects as part of the CDM. This draft was negotiated on in 2011 at the COP 17 in Durban, South Africa, and the participating countries finally agreed upon the “modalities and procedures for carbon dioxide capture and storage in geological formations as clean development mechanism project activities” (Dixon et al. 2013). Certain requirement for CCS projects were either new to CDM or had to be modified to fit this type of technology. For example, the participation requirements of the host country were expanded and new risk and safety assessments were added (Dixon et al. 2013). The guidelines decided upon in Durban, South Africa, will be discussed next.
As mentioned above, new participation requirements were added to the already existing ones. Only countries with laws and regulations that control as well as permit CCS projects can host them in the frame of the CDM, with the guidelines’ emphasis being on the control of the project activities. Regarding site selection, there are several issues that must be addressed: site characterization, access rights to storage locations and compensation for affected parties, meaning liability. The development of such a framework for a technology as sophisticated as CCS can take many years, and jurisdictions with existing laws will have a clear advantage over those without (Dixon et al. 2013).
1 2DS refers to the 2°C scenario
- Quote paper
- Nicole Glass (Author), 2016, CCS under the UNFCCC mechanisms. Use of carbon capture and storage to mitigate the impacts of climate change, Munich, GRIN Verlag, https://www.grin.com/document/351839