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Shifting gears on CCS: Delivering growth opportunities and financing the industrial transition

28th February 2020

This year will be of utmost importance for climate action in Europe and the UK. In 2020, the European Union is rolling out a series of new ambitious policies and measures from the European Green Deal that will support the green transition. The UK will also, for the first time and in partnership with Italy, host the UNFCCC’s climate conference COP26. This, alongside both the UK and Europe’s ambitious emission reduction targets, is bringing new momentum on discussions on carbon capture and storage (CCS), a much-needed technology to ensure the rapid decarbonisation of industry.

It was against this background that in Brussels on February 18th the Global CCS Institute co-hosted an event on industrial decarbonisation with the UK Mission to the European Union , exploring how CCS technologies can play a role in supporting efforts to significantly reduce CO2 emissions in the industrial sector and how to accelerate the deployment of these technologies at the necessary speed. The event convened representatives from the financial sector, policymakers, NGOs and industry.

This event was an opportunity to shed light on the UK and European Union’s (EU) CCS ambition and explore possible levers and opportunities that could be capitalised on to develop and deploy CCS technologies, projects and CO2 infrastructure.

The event featured a panel discussion with Zero Emissions Platform (ZEP) EU Director Per-Olof Granström, London Stock Exchange Group Senior Advisor for Green Finance Adrian Rimmer; Carbon Clean Solutions CEO Aniruddha Sharma and Deputy Director for Industrial Decarbonisation at the UK Department for Business, Energy and Industrial Strategy (BEIS) Sam White.

2020 brings new impetus for CCS

The Brussels event reflected the current positive momentum for CCS and highlighted how the technology has matured with existing projects showcasing its status as a proven, safe and scalable climate mitigation solution.

Offering a global overview of CCS, the Institute presented the findings of its 2019 Global Status of CCS Report, giving the audience insights into how in the last year CCS gained momentum globally with a growing number of projects and facilities operating or in advanced development alongside significant positive policy developments.

During his address, Sam White from the UK BEIS presented the UK government’s ambition to deploy CCS to decarbonise major industrial clusters while noting the importance that future European discussions on the technology should also consider the UK. He also elaborated on last year’s government consultation on new business models for carbon capture, utilisation and storage (CCUS) for power, industry and CO2 storage.

2020 will be an important year for CCS in the UK. White also spoke on the UK government’s work to develop policies to incentivise CCS action and remove barriers to industrial decarbonisation, this includes ongoing work on commercial models to support CCS and the production of low-carbon hydrogen.

Providing a European perspective, Per-Olof Granström from ZEP highlighted significant positive developments for CCS over the last months. The London Protocol amendment decision that opened the door for CO2 cross-border transport and export for offshore storage, the positive descriptions of CCS in recent European Parliament resolutions - notably on the COP25 resolution - and the number of positive signals coming from several Member States on CCS deployment opportunities, all this helping to move the needle on CCS in Europe.

In his remarks, Granström also gave the audience insights on the coming opportunities for CCS deployment in Europe. He elaborated on the European Green Deal initiatives that can support the development and deployment of CCS, starting with the upcoming Industrial Strategy to be published on March 10th. The Green Deal will also give an opportunity to develop a stronger business case for CCS with the review of the EU ETS and the carbon border tax adjustment. CO2 infrastructure will also be a key element of delivering on the Green Deal climate ambition. The revision of the TEN-E will help set the framework for the development of smart CO2 infrastructure. The National Energy and Climate Plans (NECPs) will be an important tool to engage with European Member States with strategies on CCS and hydrogen and help advance the technology’s deployment.

The event was also the opportunity to showcase the work of Carbon Clean Solutions, a leading company working on CO2 capture and separation technology for gas and industrial applications such as steel, cement and waste incineration plants. Anirrudha Sharma, the company’s CEO, shared with the audience, a major new announcement. The company recently raised a $16 million investment from three global investors. The Japanese industrial conglomerate Marubeni Corporate, the clean energy private equity firm Wave Private Equity Partners and Chevron’s corporate venture capital arm Chevron Technology Ventures are together investing in a modular, scalable and portable carbon capture technology. The company is seeking to create affordable carbon capture solutions and will also invest in the development of “containerized” solutions to achieve significant cost reductions and $30/tonne cost of CO2 capture by 2021.

Mobilising finance for climate neutrality

Markets have a crucial role to play in facilitating and supporting the green transition to a low-carbon economy. The rapid decarbonisation of industry will require to better mobilise and attract capital and investments at scale towards low-carbon technologies, infrastructure and projects. New sources of finance will also be needed to support clean technologies investments like CCS.

At the event, Adrian Rimmer, Senior Advisor on Green Finance at the London Stock Exchange Group presented on the potential impact options to attract capital into the CCS sector and projects. Capital market instruments and access to equity capital markets for green economy products and services by listed companies are key for the development of CCS.

Rimmer explained that the London Stock Exchange’s Green Economy Mark offers investors the opportunity to identify companies and investments that support the green economy. This is reflected in a detailed taxonomy that increases the visibility of companies. CCS is part of their taxonomy, this capturing information and revenues from CCS activities and services across all industries including larger consulting companies, green technology companies and engineering firms.

The Group is also currently working with investors to create a market for transition bond segments. New financial products can support industry and companies that have a credible transition plan.  Debt financing could support investment and project implementation for industries looking at mitigation their emissions with the deployment of CCS. A new form of financing with transition bonds could help a company with a credible transition plan, this combined with the use of proceeds for implementing it. CCS technologies could be a core part of this strategy and new type of bonds could bridge the financing gap.

Looking ahead

This year will be full of exciting prospects for CCS deployment in the UK, Europe and also globally. By bringing together a variety of voices from the industry, policy and the finance sector, the event highlighted how the UK and Europe can capitalise on the development of CCS to decarbonise their industries and the potential to align policies and investment to achieve CCS ambition.

 

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