The Role of Carbon Markets in Enabling Carbon Capture and Storage (CCS)

Carbon Capture and Storage (CCS) is expected to play a key role as a climate mitigation technology. Leading analysis by the IEA, IPCC and the Energy Transition Commission (ETC) all estimate that, by 2050, gigatonne-scale CCS deployment will be required. Yet, despite this key role, deployment to date remains far below what is needed to be on track to deliver on the technology’s promised potential. Financing and scaling of CCS projects has proved especially challenging for governments and the private sector alike.

This paper examines the challenges and opportunities of making CCS an economically viable decarbonization solution through one of the most prominent financing vehicles for low-carbon projects, that is carbon markets. Specifically, the paper evaluates the treatment of CCS under different carbon market-based crediting programmes including Emission Trading Systems (ETSs), the Voluntary Carbon Market (VCM), Article 6 of the Paris Agreement, and discusses complementary mechanisms that can bring the technology to market.

By: Bassam Fattouh , Hasan Muslemani , Andrea Maino , Paul Zakkour