Economic Potential of DACCS and Global CCS Progress
The 2019 agreement by the parties to the protocol, to allow for the provisional
application of a 2009 amendment to Article 6, finally enables parties to avail themselves
of provisions explicitly aimed at supporting the transboundary transportation of
CO2 for the purposes of geological storage. To date, however, only the Republic of
Korea, Denmark, the Netherlands and Norway have formally submitted a declaration
on the provisional application of the 2009 amendment. The Institute's own analysis
demonstrates there is significant potential for further activity within the auspices of the
London Protocol to address these challenges and drive regional collaboration (2). An
increasing focus on the development of regional networks or individual projects, which
in many instances will require the transportation of CO2 across international maritime
boundaries, emphasises the need for a renewed focus on the role of the treaty and the
national frameworks in supporting deployment.
REGIONAL POLICY, LEGAL AND REGULATORY DEVELOPMENTS
The global policy, legal and regulatory environment for CCS remains dynamic, with
significant developments in many jurisdictions over the past year. While a number of
early-mover nations have adopted a renewed focus toward addressing these issues,
several countries are now in the initial stages of developing their policy response to
support and facilitate the technology's deployment.
In North America, regulators and policymakers have continued to strengthen their
existing CCS-specific frameworks to offer further financial incentives and provide
new and additional regulatory frameworks. Canada's robust policy and regulatory
environment has been further strengthened by a proposed federal investment tax
credit for CCS, while in the US, the federal government has committed further project-
specific and infrastructure funding through its Infrastructure Investment and Jobs Act
(US). Additional enhancements to the US's successful 45Q tax credit scheme were made
through the introduction of the Inflation Reduction Act (US) of 2022, while expansion of
the nation's CCS-specific legislation also continues, with planned state-level legislation
and new federal legislation to regulate leasing and provide oversight of offshore CCS
operations.
The announcement of project support through the EU's Innovation fund for CCS,
coupled with a buoyant EU Emissions Trading Scheme (EU ETS) and further policy
initiatives from individual member states, continues to strengthen the supportive policy
environment for the technology in Europe. Several countries within the region have
sought to build upon this momentum, announcing new initiatives and committing further
support to projects. In the UK, the government has progressed its post-Brexit plan for
energy transition, announcing two initial hubs and further refining its business model
for transport and storage. Norway and the Netherlands have also sought to strengthen
policy and regulatory commitments to the technology and the two nations were the
first to deposit declarations on the provisional application of the London Protocol
amendments. On another positive note, several other member states are also seeking
to complete regulatory frameworks, remove barriers and provide policy support.
Recent policy, legal and regulatory developments across the Asia-Pacific region
highlight the increasing focus of government and industry on the technology as well
as the significance of these issues in supporting its more widespread deployment. In
Australia, the new Labor government has committed to strengthening baselines for
major emitters under the existing safeguard mechanism, a decision that may offer
further support to CCS projects. The development complements the earlier release
of the CCS-specific methodology under the national Emission Reduction Fund, which
will provide a formal revenue pathway through the generation of carbon credit units.
The governments of Japan and China have also taken further steps in the past year,
introducing new climate and energy policies and in the case of Japan, announcing a
commitment to the development of a CCS-specific regulatory framework.
Significant regional potential for the technology has led to several important
developments in Southeast Asia. The governments of Indonesia and Malaysia have
made several policy announcements in line with their commitments to supporting
more widespread deployment. The government of Indonesia has released a draft of its
region-first CCS-specific legal and regulatory framework, with Malaysia also indicating
that it too is in the process of developing a CCS-specific regulatory regime. While other
countries within the region have announced projects or taken tentative steps toward
deployment, their policy and regulatory regimes remain underdeveloped and will
require further intervention to support more widespread deployment.
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GLOBAL CCS
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