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Erschienen in:
2019 | OriginalPaper | Buchkapitel
8. Carbon Pricing to Promote Green Energy Projects
Policy Options
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Abstract
The “2-degree target” under the Paris Agreement is challenging, and green energy is the key to the transformation of the energy sector. “All energy, all technology” should be the basic approach for green energy. Carbon capture and storage (CCS) is an important option, but a critical barrier for CCS is its economics. In general, it will not be realized without sufficiently high carbon pricing. Also, carbon pricing is an effective instrument for comparing the economics of various technology options, including renewable and fossil fuel with CCS, and indicates the target cost for technology and finance innovation.
Carbon capture, utilization, and storage (CCUS), such as CO2 enhanced oil recovery (EOR), generates cash flow with or without carbon pricing and a CO2 EOR project as CCS is implemented by a combination of R&D subsidies and commercial base finance. Green finance may support CCUS projects when certain conditions are satisfied.
The barriers to further use of green finance for CO2 EOR projects are the high CO2 capture cost, oil price volatility, the long-term liability of safe containment, and carbon pricing. An idea for fast-tracking to CCS is low-carbon jet fuel because its demand is certain. Accumulation of experience of CCS by low-carbon jet fuel will push technology innovation and cost down and accelerate the green transformation in the energy sector. CCS/CCUS should be a target of green finance for green energy.