Transition-risk and opportunity for capturing and storing CO2

Matthias van Goor gives in his thesis a qualitative assessment of transition risk and opportunity for carbon capture and storage (CCS) and bioenergy with CCS (BECCS) in Europe, thereby specifically focussing on the Netherlands and the United Kingdom. This research was set up to increase understanding of transition risk and opportunity related to fossil CCS and BECCS technologies in the EU. Literature research and expert interviews provided the foundation for this assessment, after which results were tested on case-studies concerning Drax, Porthos, Shell and Alco Energy.

Some important aspects of the assessment are summarised below:

  • Fossil, as well as biogenic Carbon Capture and Storage technologies are deemed the most techno-economic and cost-efficient to ensure large-scale emissions reduction and even have potential for negative emissions. Adequate uptake of these technologies is lacking due to lack of risk assessment tools.
  • The Taskforce for Climate-related Financial Disclosures made a framework for financial and non-financial companies describing ‘transition risk’ to provide a holistic understanding of all non-physical climate risks for the assessment of investment. In this assessment of Matthias, a set of parameters is designed specifically tailored to the technologies of CCS and BECCS focussed on investors and project developer in the EU. Transition risk and opportunity were found to likely have effect on investment and project development of CCS and BECCS.
  • A risk to CCS and BECCS may be the competition from CO2-demanding industries like horticulture, food and beverages and the chemical industry. However, under the current system, EU ETS does not value biogenic CO2.
  • Carbon pricing mechanisms have increased effect on the business case for CCS. Given the current rise in value of the EU and UK ETS, incentives for CCS are currently around the cost price of sequestration. Subsidies and other finance heavily influence the uptake of CCS projects. The EU ETS currently does not cover negative emissions but can be expanded with Carbon Removal Certificates that can compete with EU ETS from abatement technologies.
  • Social acceptance and public perception are important factors to consider for the successful realization of CCS and BECCS. The public, and particularly local residents can NGOs see CCS as a lifeline for polluting industries to relief decarbonization efforts, yet most respondents see CCS as a viable technology for hard-to-abate sectors to increase CO2 abatement.

This research adds to close the discrepancy of translating climate risk towards targets and metrics for companies and investors that consider CCS and BECCS.