Risk-sharing is vital for up-scaling CCS, to combat climate change.
10 Pages Posted: 28 Nov 2022 Last revised: 10 Feb 2023
Date Written: November 23, 2022
Carbon Capture and Storage is now widely accepted as a key technology for reducing the increase in green-house gasses (GHGs) in the Earth’s atmosphere and thus slowing the rate of global warming. Ultimately as capture technology improves and industrial capture along with Direct Air Capture becomes more cost effective, the acceptance of geological storage for the captured green-house gasses will become the key limiting factor in the CCS process.
CCS as a technology has arisen during a time when there is increased scrutiny and opportunity for amplification of criticism (e.g. via social media). Much of this is not well informed, yet it still has the power to influence decision makers into risk-averse solutions. Regulation of geological storage could therefore end up being either a key enabler or disabler into the future. Overly prescriptive regulation based on avoidance of all risk has the potential to either stop projects in their approval phase or make them so costly that projects will be delayed to the point where they have significantly reduced benefit (i.e. they are too late).
A conversation is therefore required on the level of risk acceptance for CO2 storage sites. The requirement for “perfect” solutions will mean that suitable storage sites may not be used. The risk of doing something (i.e. developing a storage site) needs to be weighed up against the risk of not doing something (i.e. venting injectable CO2 into the atmosphere). The number of large-scale CCS projects dedicated for storage, not enhanced oil recovery, is still relatively small, so they are not yet seen as common place. This novelty acts as an impediment to acceptance. There is a natural reluctance to accept a new process which is complex and difficult to grasp, hence regulators may feel (in response to community/political pressure) the need to ensure the project approval process removes ‘all possible risks’. Whilst this may seem reasonable, it needs to be balanced against the alternative of continuing to vent that GHG. Furthermore, the consequences of possible leakage risks need to be assessed. If a possible event has a low probability of occurring and a low consequence, it can be generally treated as acceptable. This is not to say that project proponents should be allowed to develop projects without scrutiny, that is patently not appropriate. However, the balance between the benefit of preventing industrial CO2 from entering the atmosphere should be part of the risk assessment and project approval process. New projects should be encouraged rather than stymied.
This paper will discuss what is meant by risk, both as a technical term but also in terms of perception. This leads to a better understanding risk aversion and risk acceptance. We will review several different regulatory settings for comparison, and discuss risk-sharing, so that the greater common good is better understood. The aim is that all participants in the CO2 geological storage process including project proponents, regulators, financers, local and broader communities understand the how a better understanding of “risk” will lead to better environmental outcomes.
Keywords: Risk, psychology, public-private, acceptance
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