The science and arithmetic of climate change are decisive - we need more paths to progress. Despite dramatic progress in renewable power cost and deployment, greenhouse gas emissions continue to rise. Greenhouse gas reduction in the power sector is not yet on track, while emissions from land-use, heavy industry, and transportation continue to grow alarmingly. Demand for rapid decarbonization has grown as a policy priority, and increasingly financial institutions consider carbon footprint and corporate actions as a core value and potential risk. At the same time, the potential impact of an energy transition on jobs and communities prompts questions about labor, equity, and impacts to communities, as well as the total economic cost. One pathway has emerged as critical to success – large-scale carbon management. This set of technologies and approaches include carbon capture and storage (CCS), converting carbon into products for sale and removing CO2 from the air and oceans. Despite the consensus from scientific, governmental and financial leaders on the essential nature of rapidly deploying these options, many decision-makers have valid questions about the role, scale, market viability, and potential consequences of large-scale carbon management.
What is the Carbon Management Research Initiative?
The Carbon Research Management Initiative (CaMRI) is a new program at the Center on Global Energy Policy (CGEP) that focuses on speeding up decarbonization and reducing the risk and impact of climate change through carbon management. These approaches exist within the complex, competitive and changing landscape of global energy markets, financial institutions, shifting policy imperatives and approaches, and rapidly evolving technologies. The critical reduction of CO2 emissions offered by carbon management will require scholarship, insight, practical and technical options/expertise, and cross-disciplinary collaboration to help map options and actions. CaMRI’s initiative at CGEP seeks to better understand the technical, economic, and policy barriers to market deployment of CCS, CO2 recycling, and CO2 removal. It will delineate and design policy and finance options to overcome these barriers.
The initiative leverages multidisciplinary scholars and technical expertise at Columbia University, including in law, business, science, engineering, finance, public policy and social science. It will also look for partnerships with other academic, research, and public institutions in New York City, New York State, across the U.S. and the globe.
CaMRI provides independent insight and data-driven analysis for private and public sector leaders navigating this new and complex landscape. Specifically, CaMRI works to:
- Identify and assess important technologies and technology pathways for direct management of carbon dioxide.
- Be a source of new ideas and information around the emerging discipline of carbon management as well as the new carbon economy.
- Help provide insight to decision-makers charged with solving vexing public problems involving energy system decarbonization.
CaMRI focuses on U.S. institutions and stakeholders (e.g., federal and state governments or at-risk communities) while examining global actions and opportunities in carbon management. It will help to create foundries for commercial climate solutions, as well as provide insight and analysis to companies, government agencies, journalists, business leaders, and policymakers seeking a deeper understanding of what carbon management can provide economically and practically. We will start this effort with two major studies which we expect to release later this year.
Carbon Capture and Storage: Project Finance and Policy Requirements
Other clean energy systems (e.g., solar, wind, electric vehicles) have achieved project financing through a combination of targeted government policies. These include tax credits, portfolio standards, loan programs, and loading preferences. Such policies have led to dramatic cost reduction, investment in innovation, and economy-wide deployment. Carbon management approaches have largely lacked access to similar policy support options, and in most cases, are formally excluded from these options. In addition, CCS largely does not generate or produce revenues from product sales. As a carbon abatement technology, that is what it delivers: carbon abatement. The market for this service is currently immature at best. Additional policy measures are needed to close the gap for CCS project financing. Such policies should be measured, quantitatively based, and sufficient to lead private capital markets into investments. CGEP has begun a major study to understand in detail the project finance needs of large-scale CCS projects and how those needs might be met through policy actions. The work will include:
- Detailed financial models of existing and potential CCS project types around the United States;
- Assessments of the capital and operating cost gaps required to generate credible debt and equity returns for new-build and retrofit CCUS projects;
- Review of existing policies supporting both cost reduction and improved financing for CCUS projects;
- Assessments of potential policy levers to close the financial and investment gaps, including the quantification of those potential policy levers; and
- Recommendations for potential policy actions to de-risk project finances.
Options to Decarbonize Heavy Industry: Production of Low-Carbon Heat
Heavy industry represents 21 percent of greenhouse gas emissions in the United States and globally, yet in the effort to address climate change it receives far less attention than other sectors and emission sources. In some industries, removing carbon is difficult. Cement, glass, steel, petrochemical and fuel production have few options for decarbonization, in part because they require high-quality heat supplies, must operate continuously, and have by-product greenhouse gas emissions from their essential chemistry. With today’s options, these sectors will require significant innovation and financing to reduce their emissions substantially.
There are potentially many ways to provide industrial heat without releasing greenhouse gases: Burning renewable or decarbonized hydrogen; using nuclear fission for heat production; novel solar concentrating approaches; microwave and radio-frequency heating; using biomass; and capturing CO2 emissions post-combustion. Many of these approaches are not well explored from a technical or economic perspective, and few are currently in commercial practice. This report will:
- Describe current and near-market technology options for decarbonized heat production;
- Examine opportunities for near-term substitution of low-C options into current heating systems;
- Examine potential pathways for longer-term substitution of GHG-generating heat sources;
- Discuss the potential challenges facing near- and long-term substation of fuels, including cost, asset vintage, reliability, and process constraints, and;
- Discuss potential policy mechanisms to encourage low-carbon heat substitution in existing heavy industrial systems.