Facing China's Coal Future - IEA

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Facing China’s Coal Future: Prospects and Challenges for CCS © OECD/IEA 2011 Figure 16 Stakeholder views on industry readiness for CCS in China Page | 48 Source: CCII Survey. Survey Finding (Figure 16): Views differ on China’s CCS leadership. Local stakeholders suggested that China’s leadership in CCS technology would likely be developed post 2020, citing a late start in R&D and a lack of funds and policy support. Almost 90% agreed that China would not be a global leader in CCS technology development until 2020. However, 80% expressed confidence that China would inevitably become a leader in the long run, with increased Chinese government investment in R&D and drivers such as international competitiveness of CCS technology and China’s status as the largest potential CCS market. These differing views may also reflect lack of a clear global policy direction or agreement both from a policy and technical perspective on a standardised path to CCS development. Moving forward, stakeholders suggested, China’s future CCS projects should prioritise capture technology R&D (Figure 17), as CCS project feasibility from a cost perspective depends heavily on economic viability of the capture process, with capture efficiency a key priority and closely linked to an acceleration of demonstration projects. Development of policy and planning was seen as a lower priority at this point. Survey Finding (Figure 17): CO 2 storage issues remain dominant concern. Addressing knowledge and technical gaps related to storage issues in China seemed a significant priority for future development overall, with storage‐related issues accounting for over 55% of the total issues to be prioritised and addressed. Similar past studies reflect the importance of clarifying key questions of China’s storage capacity. Figure 17 Stakeholder ranking* on China’s near‐term CCS technical development priorities Source: CCII Survey.
© OECD/IEA 2012 Facing China’s Coal Future Prospects and Challenges for Carbon Capture and Storage A policy framework relevant to China Survey Finding (Figure 18): Policies to drive CCS driven by global and national developments. In their ranking of policy options to promote CCS, 54% of stakeholders stressed the requirement to establish an international climate change policy to facilitate international financing for CCS demonstration and deployment. Just over 51% cited the need for a taxation policy to provide related incentives such as a carbon tax, income tax or value‐added tax exemptions. To date, carbon taxes have been adopted in several countries to provide enhanced economic feasibility for CCS projects and increase motivation for deployment CCS projects. Stakeholders generally felt that similar policies would be required in China, and smaller groups favoured an industrial development policy mandating related CCS industry development and local municipal or regional policy action. In China, related programmes may be driven or initiated in pilot phases at the local, provincial or regional level, and it will be important to note how these structures may differ or lead the way in providing incentives for low‐carbon projects in these areas, initially for potential replication or inclusion into a national mechanism or incentives framework. Page | 49 Figure 18 Stakeholder ranking on CCS policy priorities Source: CCII Survey. Survey Finding (Figure 19): Lack of market and policy mechanisms most significant barrier to new project development. Stakeholders state the lack of policies and incomplete market mechanisms to be largest barriers to CCS deployment. High project risks and unclear project boundaries are also listed as potential main barriers. Such result is well in line with the current general perception that policy and incentive development has not been at the core of China’s CCS activity so far, and will in all likelihood require more emphasis in the future if CCS is to develop. Figure 19 Stakeholder views on barriers to cross‐sector co‐operation Source: CCII Survey.
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