Opinion by Mathew Carr (recasts this)
May 20-26, 2023 — The high cost of carbon-dioxide capture and storage right now should not dissuade the new UN 6.4 carbon market supervisory committee from supporting it.
The key is to set market structure and incentives that drive a global transition over 30 years.
A note by the “Supervisory Body” stated engineering-based activities (which presumably includes carbon capture and storage CCS and direct air capture DAC technology) “do not contribute to sustainable development, are not suitable for implementation in the developing countries and do not contribute to reducing the global mitigation costs, and therefore do not serve any of the objectives of the Article 6.4 mechanism.”
This shocked people, who expressed their dismay — stating (to boil it down) that the climate is in such a bad state all options are needed to be deployed to limit the damage.
Olga Gassan-zade, chair of the body, said the language was part of a rulemaking process rather than set in stone. “The supervisory body decides collectively on the status and progress of each document,” she said on LinkedIn. The complete source document is ready for download, below.
There is no suggestion quite yet that this technology will be completely kept away from the incentives being created by the 6.4 market, but the language indicates it won’t be prioritized.
That may make some sense because soil-sequestration, where farms use various methods to absorb more CO2 during the food-production process, might be more attractive initially on a cost-per-ton-of-CO2-removed-from-the-atmosphere basis and it could boost revenue for less-wealthy people in emerging countries around the world. Biochar credits (see story linked below) sell for about €140/ton and upwards on Puro, while direct air capture credits might be more than four times that.
UN envoys (countries) need to get the global market structure right. It needs to cost more to put emissions up into the atmosphere than the level of the incentive for taking it out. Otherwise the market structure will incentivize putting even more heat-trapping gas into the atmosphere.
“Article 6 isn’t just about financing low cost abatement opportunity in emerging markets, in fact nothing in the Paris Agreement says that it is. Certainly, emerging markets will be an important subset of Article 6 activities, but the Article and the 6.4 mechanism apply equally to all Parties and all tyes of mitigation activity. It is not the Clean Development Mechanism of the Kyoto Protocol, but a much more broadly based approach to cooperation, with carbon markets as a primary (but not the only one) foundation element of such cooperation.”
The breadth of the market and the cleverness of its structure means it does not need to trade off immediate emission removals vs longer-term ones. If you doubt emerging countries will miss out on CCS and DAC money and employment, check this out.
All technology can be incentivized right now, all around the world. It’s just that the UN and/or countries need to find a way to better structure policy.
How to do that?
Companies entering carbon credit deals need to respect the fact that laws may change and insert clauses into the contracts that reflect that fact.
Also, governments need to respect existing voluntary private-sector carbon deals when setting their new policies.
Remember…countries will probably only comply with UN climate law on a voluntary basis …that is how the Paris climate deal is structured …including involvement in the new 6.4 market. I mention this because people are not thinking enough about how the private sector and public sector will interact during the climate transition. Once investments are made, they need to be protected by whatever government signed off on them and even after there is a change in government. Otherwise the country won’t attract climate finance.
Discovering the lowest-cost carbon-removal projects should be achieved via reverse auctions covering various future timeframes (eg 2026-2030, 2031-2040, 2041-2050) — those willing to provide the lowest-cost emission removals in any given timeframe should win the incentive, whatever the technology.
What is clear is that getting the cost of “engineered” solutions like more traditional carbon capture and direct-air capture down is crucial and so firing up incentives at the UN level is important right now, Nick Gogerty, managing director of Carbon Finance Labs, a unit of Occidental Petroleum, said in a message to CarrZee.
See here for more Gogerty wisdom on the subject:
Policy can bring cheaper DAC future solutions forward into now
“Under normal demand scenarios, today’s DAC technology is believed to be available at $250-350/ton by 2023 at small <0.1 mt/yr scale. DAC is only interesting at scale as cheaper solutions are deployed.
Collectively we don’t have time to wait as the development and deployment response cycle for industrial scale DAC takes many years. It is suggested that policy investment incentives be put in place to drive DAC technology down to the $50-70/ton cost quickly to decarbonize difficult to decarbonize industries requiring high temperature or high energy density fuels. We don’t have 30 years to wait.”
[CarrZee: EU carbon prices are already above this $50-70/metric ton range]
In other words, during the next several years or two decades, DAC costs could drop from $600 to $70 per ton.
A few days after I published this recast story, the International Emissions Trading Association published a two-page critique of some of the supervisory body’s documents, noting flaws, misquotes and a lack of ambition.
See these snips.
I also asked the UNFCCC / body officials on May 22 for a comment, via the press office:
Do the comments underlined in red [see red underlines above and repeated below, for convenience] that garnered so much comment on social media show that the 6.4 SB is not being ambitious enough? Is someone free for an interview ahead of the next meeting? Any other feedback?
On May 26, the UNFCCC press office responded:
Thank you for your message and apologies for the delay in responding. Please note that we are not commenting at this stage. Thank you for your understanding.
While some prioritization of deploying capital makes sense, THE 6.4 SUPERVISORY BODY needs to find a way to incentivise all carbon-removal technology needed during the next 30 years or so, (otherwise it’s not being ambitious enough during a crisis).
(Adds Shell, IETA)
…including more CarrZee comments (follow me on Twitter @CarrZee)
See this post by Eve Tamme from Inside Climate Policy and my comments within:
The post links to another by the chair of the board that supervises the planned 6.4 market, Olga Gassan-zade:
The text underlined in red received a lot of passionate criticism online. Eg