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Clean Energy Ministerial 3 (CEM3)

25–26 April 2012, London, UK

Carbon Capture, Use, and Storage
4:15 pm–5:45 pm
25 April 2012

Overview

The development and deployment of carbon capture, use, and storage (CCUS) technologies for both power generation and non-power industrial applications is widely recognized as a critical strategy for reducing global carbon dioxide (CO2) emissions in order to address the threat of climate change. Despite significant achievements in reducing the technical barriers to CCUS, projects around the world continue to face overwhelming challenges in securing investment due to the challenges of climate policy uncertainty; large capital requirements for projects that involve technology uncertainty; and, in some applications, an operational energy penalty. Participants in this session engaged in a dialogue between government, industry, and financiers on approaches to addressing the unique financial challenges facing the full range of CCUS project types. They explored the most effective mechanisms for leveraging public funding to access private capital, and identified ways in which government and industry can better work together to reduce risks.
Key desired outcomes for the session included the following:

  • Awareness and appreciation of the difference in risk perceptions between government, project proponents, and financiers
  • High-level consideration of the efficiency and efficacy of the interventions potentially available to Clean Energy Ministerial (CEM) Ministers and their governments
  • Prioritization of risks ordered according to the impact on the availability and cost of finance and investment
  • Agreement on commissioning the CCUS Action Group to undertake work identified by the session’s participants and to support the CEM

Discussion Topics

Participants considered the following key questions in addressing this topic:

  • What interventions can governments pursue to help CCUS projects in both power and non-power applications to attract private investment and lower financing rates?
    • What are the various forms of intervention available to governments to incentivize and lower the costs of finance and investment?
    • What are the minimum conditions for attracting further investment?
    • How much certainty will the first full-scale demonstration provide? Following the first few demonstrations globally, what is the marginal level of certainty provided by the first demonstration in each individual jurisdiction?
  • Should government support be targeted at establishing the first demonstrations or should it instead focus on enabling the next wave of deployment through policy and infrastructure? How can governments reduce the risks associated with undertaking, financing, and investing in first-of-a-kind and other early-mover CCUS projects in both power and non-power applications?
    • Bearing in mind the fiscal constraints facing governments around the world, and the potential for moral hazard and windfall gains if risk is over-allocated to governments, how can governments most effectively reduce these risks?
    • Which of these risks are seen as being palatable and which are seen as showstoppers for investors and financiers?
    • How can these be reduced or most efficiently allocated?
  • How can governments encourage investment by the power industry in higher-efficiency fossil-based generation technologies? To what extent can such investment ease the transition to CCUS for generators and financiers?
    • What progress has been made in de-risking CCUS, including policy, technology, and commercial risks?
    • What are the most significant remaining risks from the government, project proponents, and financier perspectives?
  • To what extent can lessons from examples of successful policies or interventions in other industries be applied to investment in CCUS and higher-efficiency, fossil-based generation technologies?

Format

The session aimed to bring a specific subject area into focus in an interactive setting. There were no speeches, but rather a moderated conversation in which all of the approximately 25 participants from the public and private sectors were encouraged to share their views. This was a private discussion held under the Chatham House Rule.

Session Structure

4:154:20: Moderator’s Opening Remarks
The moderator described the scope of the discussion, set expectations on the time limits for individual comments, provided an overview of the three segments for open discussion, and articulated the goals for the roundtable

4:204:45: Attracting Investment and Finance to CCUS Projects

4:455:10: Reducing Risks for Early-Mover CCUS Projects

5:105:25: Lessons from Other Sectors and Government/Industry Partnerships

5:255:40: Tasks for the CCUS Action Group

The following relevant topics were discussed:

  • Efficacy and efficiency of possible forms of government intervention
  • Risks and risk mitigation

5:40–5:45: Moderator’s Closing Remarks
The moderator provided a summary of discussion and agreed positions on interventions, risk mitigation, and tasks for the CCUS Action Group.

Moderator

Tony Wood, Director, Clean Energy Program, William J. Clinton Foundation

Government Representatives

Australia: Martin Ferguson, Minister, Department of Resources, Energy, and Tourism
Canada: Joe Oliver, Minister, Natural Resources Canada
China: Cao Jianlin, Vice Minister, Ministry of Science and Technology
European Commission: Fabrizio Barbaso, Deputy Director General, Directorate-General for Energy
Norway: Ola Borten Moe, Minister, Ministry of Petroleum and Energy
South Africa: Dipuo Peters, Minister, Department of Energy
United Arab Emirates: Sultan Al-Jaber, Assistant Minister, Ministry of Foreign Affairs
United Kingdom: Charles Hendry, Minister of State for Energy, Department of Energy and Climate Change

Other Participants

Saif Al-Sayari, Executive Officer, Energy Solutions, Abu Dhabi National Energy Company, TAQA
Jean-Michel Aubertin, Chief Executive Officer, Doosan Power Systems
Allan Baker, Managing Director and Global Head of Power, Société Générale
Simon Brooks, Vice President, European Investment Bank
Jeff Chapman, Chief Executive, Carbon Capture and Storage Association
Nick Gardiner, Senior Director, Energy and Infrastructure Group – Europe, BNP Paribas
Lewis Gillies, Chief Executive Officer and Co-Founder, 2Co Energy Limited
Christopher Hunt, Managing Director, Riverstone Europe LLP
Barry Jones, General Manager, Policy and Membership, Global CCS Institute
Richard H. Jones, Deputy Executive Director, International Energy Agency
JoonTae Kim, Executive Vice President and Head of Power Business Unit, Samsung C&T Corporation
Joan MacNaughton, Global Adviser on Sustainable Policies, Alstom
Jiang Minhua, Assistant President, China Huaneng Group
James E. Rogers, Chairman, President, and Chief Executive Officer, Duke Energy Corporation
Graeme Sweeney, Special Adviser on CO2, Royal Dutch Shell
Ian Temperton, Head of Advisory, Climate Change Capital
Stale Tungesvik, Senior Vice President, Marketing, Processing, and Renewable Energy, Statoil