Carbon capture and storage (CCS) comprises a group of technologies that prevent carbon dioxide (CO2) from being released into the atmosphere. Increasingly, energy system modelling is including the use of CCS to achieve emission reduction to get to net negative outcomes.
The Global CCS Institute (GCCSI) estimates the total capital requirement for scale up to be between USD655 bn and USD1,280 bn. To achieve this, the private sector must be incentivised to invest in CCS because the capital requirement far outstrips what governments are willing to pay in the timeframe required. This means most of the funding for CCS is to come from debt, capital markets, and other sources such as sovereign wealth funds, which currently do not directly fund CCS at a meaningful scale.
A critical step towards achieving this scale up in investment is for enabling policies to be implemented between now and 2030. The role of specialist financiers will be crucial in supporting emitters that are unable to fund their CCS investments on their balance sheets. Governments can mandate specialist financiers to support investors through instruments such as project finance
To enable project finance, governments can mandate specialist financiers such as multilateral agencies and credit export agencies to support CCS investments. Support from these specialist financiers will allow the participation of commercial lenders in CCS projects as they can fund the most high-risk areas of projects. In addition, climate finance has supported numerous mitigation technologies around the world, helping to create enabling environments for their deployment at scale. As CCS deployment accelerates, sustainable finance will have an important role to play, whether through innovative lending instruments such as sustainability linked loans or through capital markets.
This report, produced by the Global CCS Institute with input from HSBC, analyses the potential for project finance to greatly accelerate investment in CCS capacity. It also studies the application of green bonds to CCS projects in hard-to-abate sectors such as cement, fertilisers and chemicals and finally the potential for climate finance to support CCS deployment especially within developing countries.