CO2 capture and carbon finance – windows of opportunity
The two pillars of carbon finance are cap-and-trade schemes such as the European Union Emission Trading Scheme (EU ETS); and project-based mechanisms such as the Kyoto Protocol’s Clean Development Mechanism (CDM) and Joint Implementation (JI). Those tools have so far largely focused on reducing emissions at the source, rather than promoting the capture of CO2. Afforestation and reforestation projects are currently the only projects to capture and store CO2 that can be incentivized with the existing tools. So far, such projects have had very limited success, for a number of reasons.
Still, carbon capture is gaining increasing recognition, as policy makers recognize that the two approaches of abating CO2 at the source or capturing it are complementary rather than competitors. The post-2012 EU ETS will yield value to carbon capture and storage; discussions to include Geological Carbon Capture and Storage within the CDM should come to a conclusion in Cancun, by the end of the year; and the energy and climate change bills discussed by the US Congress often include a Carbon Capture and Storage component. Those developments could allow for larger-scale capture of CO2.