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Rewarding polluters: CCS in CDM? (Newsletter #17)

Guest article by Iris Cheng, Climate & Energy Campaigner of Greenpeace International

Eligibility of Carbon Capture and Storage (CCS) projects in the CDM will be discussed in Durban.  CCS in the CDM means exporting unproven and risky technologies to developing countries and allowing oil companies to generate millions of carbon credits from enhanced oil production. CCS in CDM gives the false impression that we now have a climate solution that justifies the proliferation of coal plants. Is this really what the CDM was designed to achieve?

In Cancun, Carbon Capture and Storage (CCS) was approved conditionally as a project activity in the CDM as long as nine critical issues concerning CCS were “addressed and resolved in a satisfactory manner”. These are: (1) Non-permanence, including long-term permanence; (2) Measuring, reporting and verification; (3) Environmental impacts; (4) Project activity boundaries; (5) International law;  (6) Liability; (7) The potential for perverse outcomes; (8) Safety; (9) Insurance coverage and compensation for damages caused due to seepage or leakage.[1]

On 9 November the UNFCCC Secretariat released the Draft Modalities and Procedures (M&P) for CCS in CDM, which discusses how these nine issues should be addressed. It will also serve as the basis for the negotiations o the Subsidiary Body for Scientific and Technological Advice (SBSTA) in late November in Durban. However, in the 12 months since Cancun, these regulatory issues remain a long way from being resolved, whereas the gap between the industry’s promises and reality has widened substantially.

CCS: failing in Annex I countries

In the past 12 months alone, the CCS industry had suffered 12 major project cancellations and legal setbacks. The International Energy Agency (IEA) envisioned in its CCS Roadmap that there would be 100 CCS projects by 2020 and over 3,000 projects in 2050. Despite these predictions and the billions of dollars of public funding committed to CCS development, there are currently only eight demonstration projects in operation, showcasing different parts of the technology chain. There is still no large-scale full-chain CCS demonstration on a coal-fired power station anywhere in the world.

Given CCS is clearly failing to deliver and losing support in Annex I states, there is little sense in transferring this risky, prohibitively expensive and ineffective technology to developing countries. To include CCS in CDM now gives the false and damaging impression that a solution for coal emissions exists.

No added value for host countries… just headaches

Unlike other kinds of projects accredited under the CDM, CCS brings almost no added value to the host country. CCS is not an energy technology, thus will not add any power generation capacity to the host country, nor will it help the poor get access to energy. It does not help the host country avoid CO2 generation or improve energy efficiency.

CCS will create waste sites that will need to be carefully (and expensively) monitored and managed for hundreds of years, long after the operation is closed and the company has made its profits from selling the Certified Emissions Reduction (CERs). Extensive, continuous monitoring of the CCS sites is required in order to model the behaviour of the CO2 plume underground. Water resources near the CO2 burial sites will also need to be continuously monitored for CO2 seepage and contamination. It is not clear who will bear the cost for such monitoring, and in the case of leakage, the cost of remediation.

Perhaps the biggest injustice, is the transfer of long-term liability to the host country. The newly released draft Modalities & Procedures (M&P) for CCS in CDM has proposed that host country should take over the long term liability at some point after site closure, and assume the responsibility of monitoring the site and remediation of any seepage over the long term. It’s difficult to ignore how inequitable this arrangement is: the project participants, the CER purchasers get the short-term financial and climate mitigation benefits, while the host country is left watching over the CO2 waste site in perpetuity.

Furthermore, CCS liability regimes are new and unproven even in Annex I countries. The assumptions behind liability provisions governing site transfers, long-term responsibility and financial burdens are untested.  Using them as the basis of CDM modalities and procedures (M&P), before they have been shown to be effective in the real world, is highly risky. However, in the draft M&P, even these liability regimes are negated – host countries are left to develop their own rules.

Approving the technology before assuring that developing country governments have and will enforce the necessary legal regimes, including making sure that citizens have access to courts, grants industry players carte blanche to continue perpetrating environmental harm and degradation in developing countries.

CCS in CDM: rewarding polluters

A majority of current CCS demonstration projects are Enhanced Oil Recovery (EOR) projects. In the case of EOR projects, pumping CO2, nitrogen or water into depleting oil reservoirs to boost oil production is an established technology that’s been around for decades, but it does not reduce overall emissions. This is because the technology is used to pump out previously inaccessible oil, (likely in larger quantities than the CO2 you pump in) and in doing so, extend the oil field’s life by decades.

An example is the Weyburn-Midale CCS demonstration project:

In Canada, a CCS-EOR project has been set up by Cenovus Energy at the Weyburn Oil Field in southern Saskatchewan. The project is expected to inject a net amount of 18 million tonnes of carbon dioxide (CO2) in order to recover an additional 130 million barrels of oil, and prolong the productive life of the oilfield by 25 years. If this plant were a CDM project, generating carbon credits at a price of €12 per tonne of CO2 and producing oil profits of €60 a barrel, it would make €216 million from carbon credits, plus about €7.8 billion from the additional oil recovery, which equates to an average profit of €445 per tonne of CO2.

Allowing CCS projects to generate carbon credits is a direct subsidy to oil industry conducting business-as-usual work. Enhanced hydrocarbon recovery (EHR) of any type should be excluded from CDM.

In conclusion, to include CCS in the CDM  would create loopholes that would undermine climate mitigation efforts, prolong fossil fuel use, and damage the integrity and effectiveness of the CDM.

Greenpeace and CDM Watch recommend that Parties should:

  • Acknowledge that many of CCS’s environmental, legal and safety concerns set out in the conditions for CDM inclusion have not been properly addressed and resolved.
  • Clearly state that CCS cannot be included in the CDM until the aforementioned issues are addressed properly.

[1] List of issues originally identified in Decision 2/CMP.5, paragraph 29, (December 2008), again referred to in Decision 7/CMP.6 Carbon dioxide capture and storage in geological formations as clean development mechanism project activities, December 2010.


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