Orient Magazine Issue 81 - April 2021 - Page 66

EXPERT OPINION FROM OUR COMMITTEES
Government support for the industry is critical to show confidence in the CCUS sector and facilitate its growth . While it is good to have funds available for research and development , certain developers are already moving beyond that to commercial scale projects . With CCUS projects already in full operation , it could be argued that the technological risks are known and manageable . The challenge now is demonstrating commercial application of CCS for meeting climate goals through decarbonisation . This is where grant funding is proving to be vital , allowing developers to explore partnerships , develop industrial hub concepts and complimentary revenue generating opportunities such as hydrogen production .
Potential risks of CCUS
One question that is often faced by CCUS promoters is related to potential leakage of sequestered carbon dioxide , however consensus is that this is an extremely remote risk , backed up by decades of experience in oil and gas operations where hydrocarbons trapped for millions of years are recovered from the very same deep reservoirs where carbon dioxide is to be stored .
From a financier ’ s perspective , this is a low-probability but high-impact risk and may be a question for the insurance industry to consider . The role of governments in underwriting this risk is also a key discussion point when considering policy frameworks for CCUS .
Stimulating the development of CCUS
There is no doubt that a stringent carbon taxation system would drive rapid CCUS development , as it effectively recognises that there is a cost to carbon , thereby supporting the rationale for CCUS . However , it is recognised that there are wider considerations , not least the viability of the underlying businesses that are seeking to reduce or offset their emissions with or without direct access to sequestration projects . The application and extent of carbon taxation is , therefore , critical to ensure taxes are applied universally or across a large part of the economy and focused on industries which are able to respond to the appropriate incentives . It is equally important to ensure that carbon taxation does not lead to carbon leakage , with emitters moving from high to lower taxation jurisdictions .
... if the current trajectory is maintained , then the first commercially financed projects would be seen taking off both in the US and countries bordering the North Sea ( UK , Norway etc ).