Bellona nuclear digest. March 2024
A survey of events in the field of nuclear and radiation safety relating to Russia and Ukraine.
News
Publish date: October 20, 2010
Written by: Eivind Hoff
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The paper ”Analysis of financial incentives for early CCS deployment” written by Mohammed Al-Juaied compares various tax incentives, loan guarantees, cost-sharing grants, ”bonus” emission allowances and contracting for difference on the CO2 emission price. It finds loan guarantees for CCS projects to be highly efficient because 1) they enable a higher debt to equity ratio (debt requires much lower returns than equity for such novel projects), 2) interest costs on debt are reduced thanks to the guarantee, and 3) the amortisation period of a guaranteed loan is longer than that of an unguaranteed loan.
Even when the project pays a 7.5% premium on the guaranteed loan as a credity subsidy premium to prevent a net cost of the scheme to the government, this would cut the CCS project costs 30% under the model’s assumptions.
The paper also finds that the lower discount rates of government compared to companies mean support will be most efficient from a project developer’s point of view if delivered upfront. On the other hand, this may create a moral hazard as it reduces the project’s incentive to deliver CO2 storage as planned.
The paper makes a case for a combination of incentives, with some provided upfront and others upon performance.
A survey of events in the field of nuclear and radiation safety relating to Russia and Ukraine.
Russian president Vladimir Putin has told the United Nations atomic energy watchdog that Russia plans to restart Ukraine’s embattled Zaporizhzhia nuclear plant, currently occupied by Russian troops and technicians, fueling worries about a serious nuclear accident on the front lines of a grinding military conflict.
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Recent attacks on Ukraine’s Zaporizhzhia nuclear power plant "mark the beginning of a new and gravely dangerous front of the war," the UN atomic agency's director general said last week.