WORKING PAPER CCS Demonstration in Developing Countries: Priorities for a Financing Mechanism for Carbon Dioxide Capture and Storage Francisco Almendra, Logan West, Li Zheng, Sarah Forbes World Resources Institute Working Papers contain preliminary research, analysis, fndings, and recommendations. They are circulated to stimulate timely discussion and critical feedback and to infuence ongoing debate on emerging issues. Most working papers are eventually published in another form and their content may be revised. Suggested Citation: Almendra, F. et al. “CCS Demonstration in Develop- ing Countries: Priorities for a Financing Mechanism for Carbon Dioxide Capture and Storage”. WRI Working Paper. World Resources Institute, Washington DC. Available online at www.wri.org/publication/ccs-dem- onstration-in-developing-countries WORLD RESOURCES INSTITUTE •฀฀฀ 10 G Street, NE •฀ Washington, DC 20002 •฀฀ Tel: 202-729-7600 • Fax: 202-729-7610 •฀฀ www.wri.org Executive Summary CLIMATE CHANGE AND CCS In facing the challenge of mitigating global climate change, world leaders have acknowledged that no single solution exists, and therefore, a portfolio of carbon dioxide (CO 2 ) reduction technologies and methods will be needed to successfully confront rising emissions. Due to their dependency on fossil fuels, the energy supply and industrial sectors are the greatest contributors to CO 2 emissions, accounting for 25.9 percent and 19.4 percent of the total respectively. 1 In addition to efficiency improvements and enhancing clean energy use, one key option for limiting future CO 2 emissions from fossil fuel energy use is carbon dioxide capture and storage (CCS). CCS is a suite of technologies integrated to capture and transport CO 2 from major point sources to a storage site where the CO 2 is injected down wells and then permanently trapped in porous geological formations deep below the surface. Candi- dates for CCS technology include fossil fuel power plants; steel, cement, and fertilizer factories; and other industrial facilities. CCS IN DEVELOPING COUNTRIES Despite often-aggressive programs to promote energy efficiency and deploy nuclear, renewable, and other low-carbon energy sources, many developing countries will still rely heavily on fossil fuel energy to power their develop- ment for decades to come. There is therefore a need for developing countries to create strategies that address fossil fuel emissions in a way that minimizes the costs of doing so, and consequently minimizes impacts to their national development goals. CCS is currently the only near-commercial technology proven to directly disassociate CO 2 emissions from fossil fuel use at scale. Its deployment could potentially allow developing countries to gradually shift away from fossil fuels for energy and industrial needs with relatively little disruption to their long-term development strategies. If deployed as an interim measure, it could allow time for other alternative low-carbon technologies TABLE OF CONTENTS 1 Executive Summary 4 1. Climate Change and CCS 4 The Climate Change Situation 4 CO 2 Emissions Mitigation and CCS 5 2. CCS in Developing Countries 5 Attractiveness of CCS to Fossil Fuel–Dependent Developing Countries 6 Barriers to CCS Development in Developing Countries 9 Insuffciency of Financing Mechanisms as a Key Barrier to CCS 9 Timing to Develop CCS in Developing Countries 11 3. Topics of Discussion for Financing CCS in Developing Countries 11 Topic 1: Aims of Financing CCS Demonstrations in Developing Countries 12 Topic 2: Eligible Costs for Financing 13 Topic 3: Project Eligibility Criteria 15 Additional project requirements 16 Topic 4: Project Selection Process 17 Topic 5: Financing Mechanism Characteristics 19 4. Conclusion 20 Appendix 22 Notes