The Real Drivers of Carbon Capture and Storage In China and Implications for Climate Policy

Program on Energy and Sustainable Development (PESD) Working Paper No. 88

29 Pages Posted: 28 Aug 2009 Last revised: 26 May 2014

Richard K. Morse

Stanford University

Varun Rai

University of Texas at Austin - LBJ School of Public Affairs

Gang He

State University of New York (SUNY) - Department of Technology and Society; Lawrence Berkeley National Laboratory - Environmental Energy Technologies Division

Date Written: August 28, 2009

Abstract

The capture and permanent storage of CO2 emissions from coal combustion is now widely viewed as imperative for stabilization of the global climate. Coal is the world’s fastest growing fossil fuel. This trend presents a forceful case for the development and wide dissemination of technologies that can decouple coal consumption from CO2 emissions - the leading candidate technology to do this is carbon capture and storage (CCS). China simultaneously presents the most challenging and critical test for CCS deployment at scale. While China has begun an handful of marquee CCS demonstration projects, the stark reality to be explored in this paper is that China’s incentives for keeping on the forefront of CCS technology learning do not translate into incentives to massively deploy CCS in power plant applications as CO2 mitigation scenarios would have it. In fact, fundamental and interrelated Chinese interests - in energy security, economic growth and development, and macroeconomic stability - directly argue against large-scale implementation of CCS in China unless such an implementation can be almost entirely supported by outside funding. This paper considers how these core Chinese goals play out in the specific context of the country’s coal and power markets, and uses this analysis to draw conclusions about the path of CCS implementation in China’s energy sector. Finally, the paper argues that effective climate change policy will require both the vigorous promotion and careful calculation of CCS’s role in Chinese power generation. As the world approaches the end of the Kyoto Protocol in 2012 and crafts a new policy architecture for a global climate deal, international offset policy and potential US offset standards need to create methodologies that directly address CCS funding at scale. The more closely these policies are aligned with China’s own incentives and the unique context of its coal and power markets, the better chance they have of realizing the optimal role for CCS in global climate efforts.

Keywords: carbon capture and storage, China, CCS, climate change policy, post-Kyoto, Energy Policy of China

JEL Classification: Q40, Q43, Q48, O3, O33, L94, L5, L52, L1, L11

Suggested Citation

Morse, Richard K. and Rai, Varun and He, Gang, The Real Drivers of Carbon Capture and Storage In China and Implications for Climate Policy (August 28, 2009). Program on Energy and Sustainable Development (PESD) Working Paper No. 88. Available at SSRN: https://ssrn.com/abstract=1463572 or http://dx.doi.org/10.2139/ssrn.1463572

Richard K. Morse (Contact Author)

Stanford University ( email )

Encina Hall
616 Serra St.
Stanford, CA 94305
United States

HOME PAGE: http://pesd.stanford.edu/people/richardkmorse/

Varun Rai

University of Texas at Austin - LBJ School of Public Affairs ( email )

2300 Red River St., Stop E2700
PO Box Y
Austin, TX 78713
United States

Gang He

State University of New York (SUNY) - Department of Technology and Society ( email )

356 Harriman Hall
Stony Brook, NY 11794

Lawrence Berkeley National Laboratory - Environmental Energy Technologies Division ( email )

Berkeley, CA 94720
United States

HOME PAGE: http://www.ganghe.net

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