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8/7/2019 Ashok Presentation at the CSLF Financign Roundtable at Singapore - 7 April 2011 Clean
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CCS Demonstration in DevelopingCountries Analysis of Key Issues and
Barriers
Financing Roundtable
Singapore
7 April 2011
Ashok Bhargava
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Disclaimer
The views expressed in this presentation are the
views of the ADB staff and DO NOT necessarily
reflect the views or policies of the AsianDevelopment Bank, its Board of Director or the
Governments they represent.
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Contents
Background
CCS Issues and Barriers
With CCS coal-fired Power Plants Financial Analysis
Rationale for CCS Demonstration in DevelopingCountries
Fast track CCS Demonstration in Developing Countries
Recommendations
Role of CCS Demonstration Fund
Conclusions and Way Forward
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Background
The Regional technical assistance ($350,000). CCSDemonstration: AnalysisofKeyPolicy IssuesandBarriersapprovedin May2009
The TA aims to analyze key issues and barriers, in particular, financingissues for CCS demonstration in developing countries
Thereport (Sept2010) includesanalysisandrecommendations
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CCS Issues and Barriers An Overview
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Issues and Barriers Strategic
CCS is seen as a climate change mitigation technology only ratherthan a low-carbon or near-clean energy technology. It has weaksupport from developing countries. No program, plan or targets inplace to promote CCS.
Uncertain market perception limiting investments and progress
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Issues and Barriers Technical
No coal-based power plant with CCS; no experience indeveloping countries; complex design; no IGCC powerplants in developing countries; high energy penalty
Immature technology - high technical risks
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Issues and Barriers Legal and Regulatory
Critical issue for environmental health and safety. Domesticregulatory framework not fully developed. Long-termstewardship rules are key element for CCS demonstrationand deployment.
High perceived risks due to long-term liabilities
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Issues and Barriers Financial
High costs, excessive energy penalty, no incentives whichmake CCS a high cost-high risk investment decision.
Public funding is essential for initial demonstration projects.
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Coal-fired Power Plants with CCS
Financial Analysis
The analysis aims to capture the impact of equipping a coal-basedpower plant with CCS
400 MW IGCC and 600 MW Supercritical (SC) plants wereconsidered based on cost estimates in PRC
Captured and stored CO2 is about 1.8 1.9 million t (Mt)
The base cost for IGCC plant is $1.6 million/ mega watt compared to$ 0.7 million / MW for SC
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Coal-fired Power Plants with CCS
Financial Analysis..Contd
With CCS coal-fired power plants are financially unviable withthe existing tariff.
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Coal-fired Power Plants with CCS
Financial Analysis..Contd
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Electricity Tariff and Capital Cost Comparison in PRC
0.05
0.19 $/kWh
0.09 $/kWh
0.11 $/kWh
0.08 $/kWh
0
0.5
1
1.5
2
2.5
3
3.5
Wind IGCC + CCS SC+CCS Solar Std Coal
Cost($million/MW
)
0
0.05
0.1
0.15
0.2
Tariff($/kWh)
Cost ($M/MW) Std Coal tariff (ct $/kWh)
Coal-fired Power Plants with CCS
Financial Analysis..Contd
Comparingwith CCS coal-fired powerplants with only coal-fired powerplant without CCS is not a fair comparison
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Rationale for CCS Demonstration in
Developing Countries
Very good fit with the targetedcarbon intensity
Large-coal-fired capacity
addition (without CCS) willundermine the impacts of windand solar plants
Energy security solution
At the moment, CCS is theonly technology to reduce CO2emissions from fossil fuelpower plants
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Fast Track CCS Demonstration
Recommended Actions
Action Purpose By
Establish CCSDemonstration Fundof billion dollar scale
Overcome near- tomedium-termcommercial/economicgaps (up to 2020)
Provide positiveincentives for CCSdemonstration
Reduce time lag forCCS demonstrationbetween developedand developingcountries
Contributions fromdeveloped countries
Multilateraldevelopment banks toactively work with thedonor governmentsand developing
countries in setting upthe fund
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Action Purpose By
Provide complementary policysupport
countryspecific pilot regulatoryframework
Provide suitable financialincentivestax relief, tariffpremiums for carbon-free
electricity, incentives, loanguarantees, etc. for with CCSdemonstration projects
Encourage energyand power companies in
developingcountries to moveforward with CCSdemonstration
Governments inrelevant developingcountries
Fast Track CCS Demonstration
Recommended Actions.contd
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Role for CCS Demonstration Fund
A $5 billion fund to support CCS demonstration in developingcountries up to 2020
The Fund to lower risk profile for CCS demonstration projects
Capital subsidy to offset incremental cost Compensate energy penalty
Complement traditional project financing
It will motivate accelerated actions on other barriers put the CCSdemonstrations on the expected trajectory
It may incorporate smart incentive mechanisms to encourage earlymovers, higher rate for capture etc
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Conclusions and Way Forward
CCS faces formidable challenges and barriers especially atits demonstration stage in developing countries
CCS will remain at high end of the risk spectrum of thetechnologies and requires targeted financing and incentives
Early demonstration through CCS demonstration fund indeveloping countries can accelerate its wider deployment
ADB analysis has brought forward some pertinent issueswithin the uncertainties of costs and technologies.
A follow on study can be commissioned to refine analysisand recommendations and present a preferred financingmechanism
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For further details