Economic Potential of DACCS and Global CCS Progress

5.4 FINANCE The role of finance in supporting the more widespread deployment of CCS is critical. At the country level, several governments have again sought to prioritise the technology through the provision of a variety of targeted incentives and grants. In parallel, however, it is clear that far greater support from the private finance sector will be required to align investments with a net-zero pathway and provide more tangible assistance to enable widespread CCS deployment. In line with the wider shift toward green lending and sustainable investing, increased focus has been placed on the role of green or sustainability-focused taxonomies. Taxonomies of this nature now provide guidance to investors as to which activities and investments may formally be classified as environmentally sustainable. In several jurisdictions, regulations and secondary guidance setting out the application and scope of these taxonomies is already in place, while work is underway in many other jurisdictions to develop further examples in the coming years. Efforts to harmonise approaches and adopt the use of common principles has been highlighted by many as an important approach toward a globally consistent approach. Significantly, CCS has already been formally recognised as an economic activity within the EU's taxonomy, with the subsequent delegated Act setting out technical screening criteria. While this approach has afforded the technology a pathway within the EU model, it will be critical to ensure that other schemes in development around the world also reflect this view and approach. The examination of environmental social and governance (ESG) factors is increasingly a feature of wider financing and investment decisions. Recent years have seen ESG factors rise from the periphery to become an important aspect of corporate decision making. Climate-related issues have become synonymous with the "E" factor, occupying a significant space within the ESG landscape, and have resulted in increasingly detailed consideration by corporations, investors and the wider public. While financial and litigation risks continue to motivate companies to focus on climate considerations in their reporting, a focus on mandatory reporting obligations is now expected to drive further climate-related disclosures in the future. Public and private sector net-zero commitments are also a key driver for closer scrutiny of ESG disclosures by shareholders and financiers. Investors are now keen to ensure that companies are aligning their activities with their net-zero commitments and as a result, are looking for companies to provide clear and consistent disclosure statements. The emergence of several net-zero disclosure frameworks, standards and protocols are indicative of the weight that is now afforded to this information. Where CCS fits within the ESG reporting space, if at all, has been the subject of previous analysis undertaken by the Global CCS Institute. Although clearly not excluded, the quality and utility of information generated through current reporting methodologies may not meet the needs of either project proponents or end-users of this information. The Institute's recent analysis, however, has considered in greater detail how project proponents and investors may leverage the benefits of their CCS-related investments and project operations in the context of the wider reporting environment. In accordance with the prevalent view that far greater consolidation and harmonisation of reporting schemes will be required, the Institute has proposed a methodology that aims to highlight how CCS-specific factors may be included within the parameters of existing, well-defined reporting pathways. 1 An ESG Reporting Methodology to Support CCS-related Investment https://www.globalccsinstitute.com/resources/publications-reports-research/an-esg-reporting-methodology-to-support-ccs-related-investment/ [40] GLOBAL CCS INSTITUTE

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