News
Publish date: October 20, 2010
Written by: Eivind Hoff
News
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.
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.
After years of inaction, Germany is working on its Carbon Management Strategy to resolve how CCS can play a role in climate action in industry. At the end of February, the Federal Ministry for Economic Affairs and Climate Action published first key points and a proposal to amend the law Kohlenstoffdioxid Speicherungsgesetz (KSpG). Bellona Deutschland, who was actively involved in the previous stakeholder dialogue submitted a statement in the association hearing.
In the midst of a global discussion on whether natural gas should be used as a transitional fuel and whether emissions from its extraction, production, transport and use are significantly less than those from other fossil fuels, Russia has developed ambitious plans to increase its own production of liquified natural gas (LNG) in the Arctic – a region with 75% of proven gas reserves in Russia – to raise its share in the international gas trade.
In this news digest, we monitor events that impact the environment in the Russian Arctic. Our main focus lies in identifying the factors that contribute to pollution risks and climate change.