Saudi Arabia and Norway have agreed to work together to obtain the approval of the Clean Development Mechanism(CDM) Executive Board for carbon capture and storage (CCS). CCS is a process by which carbon dioxide (CO2) I captured from industrial processes, such as coal-fired powered plants or natural gas processing plants, and then injecting it far below the ground in oil and gas formations or in deep saline aquifers. The technology for injecting CO2 in the ground has been used for 30 or more years for enhance oil and gas recovery. The capture of CO2 from industrial processes requires technology still being developed.
Norway's goal is to have a baseline and monitoring methodology approved for CCS so that projects can be approved under the CDM of the Kyoto Protocol. By allowing for these projects reduce greenhouse gas emissions in developing countries and to have carbon credits or Certified Emission Reductions to be issued by the Executive Board, capital could be mobilized to reduce greenhouse gas emissions.
A U.N. climate conference in Bali, Indonesia, in December postponed a decision on inclusion in the CDM scheme pending further talks this year to clarify safety, legal and commercial viability issues.
Norway is trying to convince as many countries as possible to lobby for this effort. Norway's oil and gas company StatoilHydro has been injecting CO2 from the natural gas stream below the seabed at its Sleipner field in the North Sea since 1996. The Norwegian government is promoting CCS projects at gas-fired power plants at the Mongstad refinery and the Kaarstoe gas-processing and export plant on Norway's west coast.
If CCS were approved under the CDM, it would provide a means of contributing to the capital needed to implement this technology, but it would the sale of carbon credits probably would not be sufficient to meet the costs per ton of CO2 sequestered to pay for construction and operating CCS projects.
Norwegian company Aker ASA and engineering group Aker Kvaerner believe that CCS projects could be a $1.5 trillion to $2.0 trillion per year business as important globally as the construction of oil platforms.
The Aker prediction may be overly bullish, but the capture and storage of CO2 will be a necessary part of any climate change solution. Approving CCS as a technology or process that may generate carbon credits under the CDM would be a significant step to creating incentives to finance CCS. The Lieberman-Warner Climate Security Act, that was voted out of the Senate Environment and Public Works Committee, contains provisions that would allow CCS projects to generate carbon credits under that bill’s proposed greenhouse gas cap-and-trade system. In a prior blog, I had suggested the sale of government “Carbon Bonds” to provide low interest loans to finance CCS projects to allow the use of coal to produce low polluting energy in the United States. As we look to the future, finding ways to create sufficient incentives to generate sufficient capital to finance CCS will be critical as this process will be a necessary part of any future US climate change legislation and international program to significantly reduce greenhouse gas emissions.