In the wake of the recent UN report that unambiguously warned to reduce carbon dioxide emissions to avert catastrophic climate effects, the debate on how to decouple GDP growth from CO2 emissions has only intensified. But while many see the report as the official death sentence of fossil fuels, particularly coal, Australia is taking a different approach. Rather than engaging in “coal wars”, the country’s chief scientist has urged all parties to focus on the baseline: how do we reduce CO2 emissions to cap global warming at the upper limit of 1.5°C?

The scientist, Dr. Alan Finkel, argued that the focus should be on outcomes (reduced atmospheric emissions) and that governments should “use whatever underlying technology are suitable for that”. The reason behind this is simple: stopping coal use within the next 15 years, as pressed by the UN report, is an unrealistic target for too many developing countries that rely on the fuel, and will continue doing so for the foreseeable future. And now, the IPCC may have provided the final trigger to spur the rise of carbon-reducing technologies, such as carbon capture and storage (CSS), as a viable option to reduce harmful emissions.

Unrealistic phase-out

Conventional thinking argues that in order to slash emissions in line with IPCC findings, there needs to be rapid progress in the decommissioning of coal-fired power plants, followed by their swift replacement with renewables. But for many countries, especially developing nations, sticking to the UN’s phase-out schedule is a tall order. The low-key response to date reflects the challenges facing governments having to balance the social, economic and political implications of going green.

Australia has been among the most vocal critics of the report’s ambitious timeline and a proponent for advancing CCS. The country’s environment minister, Melissa Price, reiterated that Canberra’s primary commitment was lowering domestic electricity prices, for which coal is indispensable. But more importantly, Australia’s reluctance to abandon coal, which generates two-thirds of its electricity and is a significant export, highlights that abolishing coal is economically difficult even for rich countries – and barely affordable for developing ones in need of meeting their growing energy needs.

As emerging economies are focused on stimulating growth, their energy needs are rising in parallel. For better or worse, coal remains one of the cheapest ways of satisfying increased energy consumption, compared with alternative sources of electricity that can be three or four times more expensive. Unsurprisingly, coal demand is predicted to rise in Asia and Africa, which will compensate for falling Western demand. Related: Libyan Oil Production Could Get Major Boost

Currently, coal supplies a third of total global energy demand, roughly 76 percent of which comes from China, and developing countries keen to augment their coal-fired power capacity. A total of 70 gigawatts of new coal capacity was added globally in 2016. In India alone, roughly 50 gigawatts of new coal-fired power generation capacity is under construction. Countries as varied as Indonesia, Kosovo, South Africa and Kenya are following suit. For them, abandoning fossil fuels could slow the development of essential energy capacity and result in the re-prioritization of funds earmarked for infrastructure development.

Is a CCS sea-change coming?

This and the urgency of climate change make CCS look increasingly like a viable compromise. And as it happens, several factors are now converging into ideal conditions for the technology to take off in earnest. First, stricter environmental controls have led to a sustained “flight to quality” coal, which creates fewer emissions. Low-grade coal supplies are therefore increasingly superseded by higher-quality alternatives in the market.

Subsequent price increases of high-quality coal caused by environmental regulations, in turn, is making CCS applications profitable – a vital step because according to models by the International Energy Agency (IEA), carbon capture is “the only technology able to deliver significant emissions reductions from the use of fossil fuels.” The technology could account for at least 13 percent of cumulative emissions reductions by 2050, making CCS indispensable for worldwide deep emissions cuts. Related: Big Oil Walking A Tightrope As Prices Rise

Furthermore, these developments coincide with the formation of the “Clean and Advanced Fossil Fuel Alliance” based on a White House plan. Envisioned as “a new, central institution” to promote clean coal technology with the participation of scientists and policy-makers, it is meant as a counterweight to the World Bank’s (WB) halting of coal plant funding. The WB earlier this month reiterated this position during the Civil Society Townhall 2018 event in Indonesia, despite the leaders of both African and ASEAN countries stressing the continuing role of coal and carbon capture technologies. The Bank recently decided not to support a Kosovo power plant due to its reliance on coal, despite the fact that the country has generous amounts of lignite and is suffering from regular power outages.

The need for deep carbon emission reductions

Still, the UN report will likely add new momentum to CSS projects currently underway in Norway, Canada and the US. These are already capturing 27 million tons of CO2 every year, and are providing essential data in the advancement of large-scale capture facilities to help fine-tuning processes and cut the development costs of new projects. Increasing the number of large-scale projects under development is the key to exploiting the potential of CSS technology and to paving the way for broader deployment.

The IPCC is undoubtedly right – deep carbon emissions need to be achieved in earnest if global warming is to be kept at a manageable level. But discounting CCS is no longer an option as a focus on outcomes is the only way to create comprehensive emission-cutting strategies on a global level. As with so many other things, innovation is key, and CCS could be the means to unlock climate friendly energy without endangering economic development.

By Richard Talley For Oilprice.com

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