How can carbon capture utilization and storage be incentivized in China? A perspective based on the 45Q tax credit provisions

Fan, Jing-Li; Xu, Mao; Yang, Lin; Zhang, Xian; Li, Fengyu

doi:10.1016/j.enpol.2019.07.010

Cited by 57 publications

(17 citation statements)

References 40 publications

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“…In 2019, the central government plans to assign subsidies at around 86.6 billion CNY to renewable energy sources; however, both the whole value chain of CCUS and its components are not taken into account [80]. Furthermore, unlike the U.S. where the 45Q tax credit is introduced to provide a credit of up to US$50 per tonne for CO2 that is geologically buried and up to US$35 a tonne for EOR or other CO2 utilization processes [81], China to date does not have a direct tax stimulus policy for CCUS. Therefore, the high capital cost which is the most substantial barrier for CCUS [82] remains unsolved.…”

Section: A Lack Of Financial Subsidiesmentioning

confidence: 99%

China's carbon capture, utilization and storage (CCUS) policy: A critical review

Kai

Ashworth

Zhang

et al. 2020

Renewable and Sustainable Energy Reviews

204

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Carbon capture, utilization and storage (CCUS), has been deemed an essential component for climate change mitigation and is conducive to enabling a low-carbon and sustainable future. Since the 12th Five-year Plan, China has included this technology as part of its future national carbon mitigation strategies. China's policy framework in relation to CCUS has had a strong influencing role in the technology's progress to date. This paper employs the "policy cycle" to analyze China's existing CCUS regulatory framework at the national and provincial level, evaluate its performance and clarify its shortcomings in light of the comparisons of policy movements undertaken in other countries. The results indicate that China's CCUS policy is insufficient for further development of the technology and many issues remain to be solved. This includes the lack of an enforceable legal framework, insufficient information for the operationalisation of projects, weak market stimulus, and a lack of financial subsidies. These factors may be the reason we have seen low participation rates of Chinese companies in CCUS and little public understanding of what the technology offers. To overcome these challenges, suggestions are provided for improving China's CCUS legal and policy framework.

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Section: A Lack Of Financial Subsidiesmentioning

confidence: 99%

China's carbon capture, utilization and storage (CCUS) policy: A critical review

Kai

Ashworth

Zhang

et al. 2020

Renewable and Sustainable Energy Reviews

204

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“…Thus, for stable cooperation of CCS-EOR project, a deterministic direct subsidy will be preferred. (Fan et al 2019c). The legislation would remove the cap for new projects, make credit available for a 12-year period to projects that begin construction before 2024, and increase the credit for EOR to $35/ton and to $50/ton for geologic storage 2 .…”

Section: Revenue From the Carbon Marketmentioning

confidence: 99%

Evaluation of cooperative mitigation: captured carbon dioxide for enhanced oil recovery

Zhu

Yao

Zhang³

2020

Mitig Adapt Strateg Glob Change

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Robust mitigation options will play significant role in achieving the target of limiting global change to below 1.5°C above pre-industrial levels by 2100. To support cooperation for mitigation development, we establish a real options-based model to evaluate the rational decisions of exercising the abandon option for carbon capture and storage-enhanced oil recovery (CCS-EOR) projects under oil market and geological uncertainties. Three possible cooperative mechanisms (fixed carbon dioxide (CO 2 ) price, oil-indexed CO 2 price, and joint venture contracts) among CO 2 -EOR stakeholders are evaluated. The results show that the conflicts in profit maximization targets for different stakeholders in cooperative mitigation are to a great extent unable to be avoided. A joint venture business model is preferred in cooperative mitigation as it can effectively weaken such conflicts. And it is more reasonable to provide incentives to the downstream of the CO 2 -EOR chain than compensating the adoption cost of carbon capture technologies in the upstream. From a global perspective, the inefficient cooperation can be a main barrier that hinders the development of deep-cutting options. Global mitigation strategies should not only focus on promoting technology progress but also the design of innovative business models to balance the benefits among stakeholders. A joint venture business model is recommended in both the developed and developing countries for seizing the early mitigation opportunities. Keywords Real options . Monte Carlo simulation . Carbon capture and storage (CCS) . Enhanced oil recovery (EOR) . Cooperative mechanism of mitigation

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“…Carbon capture utilization and storage (CCUS) can account for 7% of the cumulative carbon dioxide emission reduction capacity required globally by 2040. This would imply a rapid scale-up of CCUS deployment from around 30 million tons of carbon dioxide currently captured each year to 2300 Mt per year by 2040 (Fan et al, 2019). Studies show that without CCUS supply chains it is possible to reduce carbon dioxide emissions within the target with costs raised by about 138% (IPCC, 2014).…”

Section: Graphical Abstract 1 Introductionmentioning

confidence: 99%

“…The important role of CCUS supply chains for China is recognized by Yu et al (2019): they help facilitate energy transactions, support low carbon development and reduce costs of meeting environmental goals. However, Fan et al (2019) report that economic incentives are required for China so that these systems do not remain in the 'technology valley of death' (Von Stechow et al, 2011).…”

Section: Graphical Abstract 1 Introductionmentioning

confidence: 99%

“…The author presents a feasibility study of a CCUS supply chain with CO2-EOR in the North Sea Chalk Field which is the oldest and one of the largest oilfields in the Danish sector: 40 Mton of carbon dioxide can be captured and in this condition the system has a net present value (NPV) value of $124 million. Uncertainties in the model (in particular in coal and carbon trading price) are also considered in the CCUS supply chain developed by Fan et al (2019) for China.…”

Section: Graphical Abstract 1 Introductionmentioning

confidence: 99%

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Optimization of CCUS supply chains in the UK: A strategic role for emissions reduction

Leonzio

Bogle

Foscolo

et al. 2020

Chemical Engineering Research and Design

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The UK is the second largest emitter of carbon dioxide in Europe. It aims to take urgent actions to achieve the 2030 target for CO2 emissions reduction imposed by EU environmental policies. Three different carbon capture utilization and storage (CCUS) supply chains are developed giving economic indicators for CO2 utilization routes not implying carbon dioxide hydrogenation (i.e. with high TRL). The study presents an innovative proposal to reduce CO2 impact in the UK, a country rich in coal, which requires reduction of carbon dioxide emissions from flue gases as the easiest and best performing solution. Bunter Sandstone, Scottish offshore and Ormskirk Sandstone are the storage sites considered, while several attractive potential utilization options are considered. Through minimization of total costs, the CCUS supply chain with Bunter Sandstone as storage site results in the most economically profitable solution due to the highest value of net present value (€0.554 trillion) and lowest value of pay back period (2.85 years). Only carbon tax is considered. The total cost is €1.04 billion€/year. Across the supply chain, 6.4 Mton/year of carbon dioxide emissions are avoided, to be either stored or used for calcium carbonate production. Future work should consider uncertainty, dynamics of market demand and social aspects.

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How can carbon capture utilization and storage be incentivized in China? A perspective based on the 45Q tax credit provisions

Cited by 57 publications

References 40 publications

China's carbon capture, utilization and storage (CCUS) policy: A critical review

China's carbon capture, utilization and storage (CCUS) policy: A critical review

Evaluation of cooperative mitigation: captured carbon dioxide for enhanced oil recovery

Optimization of CCUS supply chains in the UK: A strategic role for emissions reduction

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