Paul Zakkour: Carbon Capture and Storage (14.11.12)

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Paul Zakkour: Carbon Capture and Storage (14.11.12)

  1. 1. CCS in the CDM: Status and Future Perspectives Paul Zakkour Carbon Counts University of Edinburgh MSc Guest Lecture 14th November 2012
  2. 2. Overview• CCS in the CDM, covering – What has happened so far – Where we are now – What happens next – What we might expect to happen as a result• Plus quick primer on the CDM to start....
  3. 3. The CDM• Est. in Article 12 of Kyoto • Basic principal for CER generation Protocol tCO2 emissions of project relative to• Modalities and Procedures counterfactual (“baseline”) (M&Ps) – agreed at COP7, 2001• M&Ps – rulebook for how CDM 120 operates 100• Various decisions – by the COP Baseline emissions (BE) Emission reductions (ER) and EB provide additional 80 Tonnes CO2-equivalent guidance 60• 3 x M&Ps – Standard; Forestry; Leakage emissions (LE) Small-scale...CCS becomes 4th 40 Project emissions (PE)• CDM projects generate “certified 20 emission reductions” or CERs Project start up 0 1 2 3 4 5 6 7 8 9 Time (t) 10 11 12 13 14 15 ERt = BEt - (PEt + LEt)
  4. 4. CCS in the CDM COP11/CMP1 COP12/CMP2 COP14/CMP4: COP15/CMP5: COP16/CMP6 COP17/CMP7 COP18/CMP8 More proposals; EB to recommend “New” list for SBSTA Decides CCS Agrees Transboundary request for workshop. capacity COP/MOP what to to work on and eligible modalities and and Global Parties submit bldg, Parties do. Use Experts advise CMP what provided a procedures for CER reserve views submit more to do number of issues CCS in the decision views. More submissions resolved. New CDM COP14/CMP4 from Parties M&Ps for CCS to to decide be developed by COP17 SBSTA36: SBSTA31: SBSTA27: request Expert Considered: Two NM & PDDs SBSTA24: Draft text with 2 x synthesis Workshop: 1.Transboundary submitted 2 x CCS bracketed reports, plus more Considered issues workshops for/against submissions from SBSTA32: technical 2.Global CER inclusion Parties Continued and legal reserve discussion issues for EB22: EB26: EB50 of draft CCS CDM boundaries, Legal/tech recommend text. leakage, issues Positives & CCS CDM permanence. Negatives templates: Need COP Synthesis for CCS guidance Report #3: CCS CDM WG: Based on Established at 2 x synthesis submissions EB68 reports Expert Report requested produced for EB at COP16 2005 2012Updated from: Zakkour, P. D, Cook, G., Carter, A., Streck, C. and Chagas, T. (2011) Assessment of climate finance sources toaccelerate carbon capture and storage deployment in developing countries. A report by Carbon Counts and Climate Focus forthe World Bank. 16th June 2011. Washington D.C.
  5. 5. Areas of concernGeneral issues: Specific issues - since Copenhagen• Boundaries, leakage and COP (CMP 5, 2009): permanence • Non-permanence• Timescales of benefits vs • Monitoring and verification liability• Impact on CDM market • Environmental impacts - ecosystems, climate• Scale and impacts of leakage • Project boundaries and• Continue fossil fuel use transboundary issues• Sustainable development • Liability• Role of CCS in climate • Perverse outcomes change mitigation • Safety • Insurance and compensation for leakage
  6. 6. Durban Decision• COP17/CMP7 – breakthrough for CCS within UN negotiations• Agreement and Adoption of modalities and procedures for CCS – 17 page text at single meeting – could be a record for recent years!• Lots of new things included (next slide)• A few matters left outstanding – Transboundary projects – Global CER Reserve
  7. 7. Durban Decision (cont.)• Broad building blocks of approach: 1. Apply existing M&Ps (mutatis mutandis approach) 2. Modify existing elements to address CCS issues: • Additional Definitions • Additional Participation Requirements • Additional requirements for Validation/Verification (“DOEs”) 3. Develop new technical elements to address CCS specific concerns: • Site selection and characterisation • Risk & safety assessment • Monitoring • Financial provision • Environmental and socio-economic impacts • Permanence & Liability 4. Establish a CCS Working Group to support EB in implementation• Permanence & liability agreement major achievement
  8. 8. Participation requirements• Host country must establish laws or regulations which cover the following aspects: a) Site selection, characterization and development procedures; b) Legal right to store CO2 for the developer; c) Redress for affected entities, individuals and communities for damages (e.g. environmental, material, or personal injury); d) Remedial measures to stop or control any unintended seepage, restore the integrity of storage site, and to restore long-term environmental quality; e) Addressing liability arrangements for storage sites; f) For a host Party that accepts the obligation to address a net reversal of storage, establish measures to fulfil such an obligation• Technical guidance on these is provided, and laws must be consistent with those
  9. 9. Liability & Permanence (scope) Geological storage risks and potential impacts Impacts to ecosystems, health, property etc Permanence Seepage at surface Geochemical effects Geomechanical effects Seepage at surface • Human health & • Effects of reactive • Induced seismicity • CO2 back to the ecosystem impacts processes with CO2 in the • Displacement of brines atmosphere/water • Damage to property subsurface (e.g. • Damage to subsurface column and/or resources groundwater) property (e.g hydrocarbons)“Liability” “Net reversal of storage” Supporting elements for liability & net reversal Host country laws established Obligation to submit Verification Report every 5 years Transfer of liability CER reserve (5%, released after 20 years) Obligation for the PPs to cancel compliance units to address non-permanence Obligation for either host or buyer country to cancel compliance units to address non-permanence Financial Provision 9Source: L. Schneider, UNFCCC, 2011
  10. 10. Approach to “Liability” Short Medium Long Start Closure closure completed Transfer ofProject participant is liable until closure is completed liability Host country laws established Transfer of liabilityHost country Party laws “backstop” liability Liability transferred under bilaterallyfor redress and remedial measures agreed conditions Host country Party holds liability for monitoring, remedial measures and Financial provision compensation for damagesProject participant holds financial provision to:• Ensure funds are available for redress and Host country Party receives financialcompensation in the event of damages (e.g. provision from project participantecosystems, communities)• Ensure funds available to close site in event ofinsolvencyFinancial provisions are transferable to host countryPartySource: L. Schneider, UNFCCC, 2011
  11. 11. Approach to “Net reversal of storage” Failure to submit Verification Report Net reversal of storage within 5 years after the last reportTransfer of CERs to cancellation account from: Cancel all CERs:1.CER reserve (5% of CERs generated) 1.Held in the CDM Registry2.Pending account (to be issued)3.PP holding account Where these do not cover the level of And, within 1 year, all CERs issued net reversal, the balance of CERs... to the project proponent ... ...must be compensated by the project participant by cancelling the respective number of Compliance Units And, where the project participant does not fulfil the obligation above, it must be met by.... ...the host Party, where it agreed to take on this obligation in LoA ...the AI Party which holds the CERs in its registry, where this obligation has not been agreed by the host Party 11Source: L. Schneider, UNFCCC, 2011
  12. 12. Liability & Permanence (in practice)• Provisions – CER Reserve Account – 5% of all CERs generated withheld – Financial provision – established by Project Proponent; transferable to host country• Monitoring termination & closure – Minimum 20 years monitoring after closure – Must have been no seepage for 10 years – All available evidence from observations and modelling indicates CO2 will be completely isolated from the atmosphere in the long-term • History matching of modelling and monitoring • Modelling confirms no future seepage expected• Liability to be transferred to host country Party – Financial provision also transferred to host country Party• Net reversal risk allocated to host country or Annex I Party – CER Reserve Account released to project proponent
  13. 13. Work programme in progress• EB67 (Bonn, May 2012) – Released 2 x supporting documents (or “standards”): • CCS CDM Methodologies template • CCS CDM Project Design Document template – Established CCS Working Group & Chair/Vice Chair (Miguez/Kennedy)• SBSTA meeting (Bonn, May 2012) – Considered submissions from Parties on outstanding items: • Possibility for a “Global CER Reserve” – would act in addition to 5% project reserve (pooled reserve) • Approach to transboundary projects (eligibility, responsibility, regulation, joint liability, approvals etc.) – Issues to be resolved in Doha (CMP8, Dec, 2012)• EB68 (Bonn, July 2012) – CCS Working Group members agreed – 5 “experts” (including me!)• Validation and verification (ongoing) – New competencies mean new accreditation standards needed – DOEs will need to apply for accreditation to the new “sectoral scope”• COP18 (Doha, Dec 2012) – Legal paper on Transboundary Issues about to be published
  14. 14. Implementation issues• Participation requirements set interesting precedent in UNFCCC and International law: – International law prescribing what sovereign states law must say!• Also a big challenge for non-Annex I countries to fulfil: – None have appropriate laws at the current time – Complex procedure to design legal system for CCS – EU/UK experiences challenging enough! Even tougher in countries with weak governance and limited government resources• Ongoing capacity building in this area: – World Bank: North Africa, Jordan, South Africa – Asian Development Bank: China and SE Asia
  15. 15. Outlook: CDM Abatement cost CER supply $/tCO2 avoided 150 Non Annex I country CCS MACC - 2020 • EU ETS Ph 3 – qualitative restrictions will apply 125 Cement by both country and activity 100 Gas power • Only LDCs and countries with bilateral Iron & Steel agreement with EU allowed to land CERs in EU 75 Coal power ETS (“ADP” is not “international agreement”) Chemicals 50 Gas processing • Some project activity types barred (e.g. HFCs) 25 0 0 Abatement cost 20 40 60 80 100 120 Abatement potential Very uncertain market outlook $/tCO2 avoided MtCO2 per year 150 Africa 125 Other CER demand 100 India 75 China • KP CP1 – ends 31/12/12 Other Middle East • KP CP2 – ‘agreed’ at Durban COP. Only EU so 50 developing Asia far; no agreed QELRO (-20% for EU?) Latin America 25 • 20:20 EU QELRO – likely to met through 0 domestic measures plus CERs from existing 0 20 40 60 80 100 120 pipeline of CDM Abatement potential MtCO2 per yearMACCs from: Zakkour, P. D, Cook, G., Carter, A., Streck, C. and Chagas, T. (2011) Assessment of climate finance sources to accelerate carbon capture andstorage deployment in developing countries. A report by Carbon Counts and Climate Focus for the World Bank. 16th June 2011. Washington D.C.Data based on IEA Technology Roadmap for CCS. © OECD/International Energy Agency, 2009. Note: Includes cost of capture, transport and storage
  16. 16. Outlook: new forms of climate finance DEVELOPED COUNTRIES DEVELOPING COUNTRIES • Wide range of LOW Cancun Agreements Climate Finance in 2020: US$100 billion per year CARBON INVESTMENT discussions ongoing: – Continuation of CDM Public Adaptation Mitigation Finance – Green Climate Fund – Technology Public Finance Private Finance Mechanism Government Funds Carbon Market Carbon Funds Investment [leveraged] Private Investment – New market based mechanisms Green Climate Technology Development (“NMBMs”; under the Mechanism Bank Funds Fund convention?) KEY Linkage Financial flow• Discussions at a “structural” stage rather than implementation (although Tech Exec Committee and new GCF Secretariat decided)• Unclear where CCS might fit within all of this
  17. 17. Further info inthese reportsAvailable at ourwebsiteThank youPaul ZakkourEmail: paul.zakkour@carbon-counts.comWeb: www.carbon-counts.com

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