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Clarity on liabilities helps support CCS commercialisation
18 Jun 2012
The Global CCS Institute today released a report placing a value on the key liabilities arising from any CO2 release at a well-sited and managed CCS project.
“This landmark study shows that costs of managing liabilities from an accidental release of CO2 are unlikely to impede development of a CCS project,” said Brad Page, CEO of the Global CCS Institute.
“This is an important step forward in the development of the CCS industry as it demonstrates that liabilities can be valued, based on standard approaches used by the financial and insurance industries.”
“Uncertainty around the costs of liabilities associated with CCS, particularly liability for long-term storage, has been seen as a barrier to the development of CCS”, added Page.
“This is the first public study of its kind and clarifies important issues in developing long-term liability frameworks for the industry.”
Applying the approach to data from a potential real-world project, estimated total damages from any release of CO2 and associated gases at that site are unlikely to exceed US$18.6 million over 100 years, or around US$0.37/tonne of CO2 sequestered by that project over its lifetime.
The report indicates that over 85 per cent of the liability costs are for the purchase of permits to cover the cost of any release of CO2 into the atmosphere.
A key finding of this study is that the range of cost estimates is highly sensitive to site-specific data. Sound site selection and site-specific monitoring is essential in order to ensure that the risks of CO2 release at any particular project site are very low.
Results from this study suggest that a well-sited and appropriately managed CCS project would have relatively small potential for impact on the surrounding environment, in part, because risks of leaks are small and able to be detected in a reasonable timeframe should they occur.
The report was prepared by Industrial Economics, an expert in environmental economics and natural resource damage assessment, at the request of a diverse group of organisations from industry, government, and the environmental community.
“The Institute is pleased to be part of an international team sponsoring this study,” said Page.
“While individual organisations may have differing views on CCS, we all share a common interest in how potential CCS liabilities can be valued, and the likely magnitude of those liabilities at a well-managed site”.
This study was made possible through the support of the following organisations – either financially, or as members of the Steering Group:
CO2 Capture Project, Chevron, Duke Energy, Environmental Defense Fund, Government of Alberta, Global CCS Institute, Integrated CO2 Network, Industrial Economics Incorporated, Natural Resources Defense Council, Southern Company, State of Wyoming, Wade, LLC and World Resources Institute.
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The Global CCS Institute works with organisations and governments to accelerate the broad deployment of commercial CCS and ensure that the technology plays a role in responding to the world’s need for a low-carbon energy future.
The Institute plays a key role in knowledge sharing across demonstration projects and is working on enabling the regulatory and policy as well as commercial and financial conditions for CCS to be deployed commercially around the world. It has more than 330 Members.
For more information, visit www.globalccsinstitute.com