Fossil fuels remain a vast energy resource, are widely distributed around the world, and remain heavily relied upon for energy generation. Reducing local pollution and emissions of greenhouse gases (GHGs) from the combustion and processing of these fossil fuels is set to be one of the world’s biggest challenges in the years ahead. Carbon capture and storage (CCS) could have significant impact as a carbon mitigation technology in GHG emitting industries. This report assesses some of the most important barriers facing CCS deployment in developing and transition economies in the Balkans and Southern African regions. This report assesses the economic and environmental GHG impacts of potential CCS deployment in the power sector in the two regions using a techno-economic model. It analyses legal and regulatory frameworks that could be applicable to potential CCS deployment in these regions and assesses the role of climate finance to support prospective investment needs for CCS projects in developing countries. Finally it examines potential structures for financing power plants equipped with CCS and their impacts on the electricity rates through a levelised cost of electricity model.

The publication presents the following barriers to large-scale deployment of carbon mitigation technology:

technical issues of integration and scale-up
lack of legal and regulatory requirements to reduce investor risk
lack of policies to create market drivers and mitigate economic impacts, including electricity price hikes, and financing mechanisms.

In order to overcome these barriers the report recommends that:

a platform should be established for these countries to discuss and agree on multilateral and regional treaties for CCS-related issues
multilateral and regional agreements on potential crossboundary movement of CO2 for disposal and related issues are needed so that operations can be conducted based on country agreements
regional and international regulatory frameworks for CCS activities should take into account the enforcement of criteria for selection of CO2 storage sites and issues concerning monitoring, assessments, liabilities, and compensation
addressing the regulatory requirements for CCS in developing countries should include consideration of funding sources to meet these regulations, through accessing public sources of climate finance or leveraging private finance through carbon markets
timing is important, and fast-tracking of low-cost opportunities in demonstration projects could create prospects for targeted technical, regulatory, and institutional capacity building in developing countries
establishing certainty in supporting climate finance policy frameworks for CCS would be crucial in creating an economically attractive and low-risk environment for project investors.

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Carbon capture and storage