Sunday, March 15, 2009

Billions for Carbon Sequestration?

From the ringside seat to the oil sands project that we have in Athabasca/Edmonton, it would be easy to take comfort in the $2billion plus committed by governments in Canada to finding improved cost-effective carbon sequestration ( or "carbon capture and storage", CSS). But, personally, I would find the announcement of two or three new nuclear reactors for northern Alberta and Saskatchewan to be more comforting. There is absolutely no guarantee that a cost-effective and sustainable CCS will ever come into being; the search for CCS also represents public resources diverted from the search for greener and more sustainable forms of alternative energy. Indeed, I am cynical enough to believe that this expenditure of money is as much about public relations as anything else.

On this subject, the recent leader in the Economist of March 7 (pp.22 and 74-75) put it quite well:

"With the private sector sitting on its hands, Western governments are lavishing subsidies on CCS. Some $3.4 billion earmarked for CCS found its way into America’s stimulus bill. The European Union, which already restricts greenhouse-gas emissions through a cap-and-trade scheme, unveiled further incentives for CCS last year. Britain, Australia and others have also vowed to help fund demonstration plants partly because they reckon the private sector is put off by the huge price-tag on a single CCS power plant, and also in the belief that the cost of CCS will fall with experience.

Burning cash
The private sector, however, is reluctant to fork out not just because of the upfront cost of power plants, but also because, tonne for tonne, CCS looks like an expensive way of cutting carbon. The cost of it may fall, but probably not by much, given the familiarity of the technologies it uses.

Politicians should indeed encourage investment in clean technologies, but direct subsidies are not the way to do it. A carbon price or tax, which raises the cost of emitting carbon dioxide while leaving it up to the private sector to pick technologies, is the better approach. CCS is not just a potential waste of money. It might also create a false sense of security about climate change, while depriving potentially cheaper methods of cutting emissions of cash and attention—all for the sake of placating the coal lobby."

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