Carbon Capture and Storage: A New Path for Emission Reduction in Developing Countries

In Asia and the Pacific, decarbonization has been slow in heavy industries, such as steel, chemicals, and cement manufacturing. Photo: Rob Lambert
In Asia and the Pacific, decarbonization has been slow in heavy industries, such as steel, chemicals, and cement manufacturing. Photo: Rob Lambert

By Atsumasa Sakai

With the right policies, and financial support, developing countries in Asia and the Pacific can leverage carbon capture and storage technology to address carbon emissions from heavy industries.

Decarbonization in developing countries is steadily progressing in the power and transport sectors as a result of accelerating renewable energy use, advances in battery energy storage and the use of electric vehicles.

However, the progress is slow in another large emission sector – heavy industries, such as steel, chemicals, and cement manufacturing. These industries are estimated to account for around one-fifth of the global greenhouse gas emissions or more. As seen in the case of the European Union's pilot carbon border adjustment mechanism, decarbonization is now the industries' major management agenda.

Because these industries require heat in the manufacturing process or generate carbon dioxide as a by-product, the practical solution for their decarbonization would be to remove carbon dioxide instead of avoiding carbon dioxide emissions.

Therefore, carbon capture and storage technology will help with their low-carbon energy transition, though its deployment has been slow. The reason may not be the carbon capture and storage technology itself since the technology is not new and has been proven to be operational in developed countries like the United States. Rather, the major barrier is the lack of adequate business models to secure its commercially sustainable operation.

 A dedicated carbon dioxide transmission and storage operator model with carbon capture and storage hub infrastructure could be an optimal carbon capture and storage business model for developing countries.

As a consequence of a high economic growth in some developing countries, more industrial parks and/or special economic zones are being established to boost economic growth. Such parks and zones typically accommodate heavy industry, many of which are large carbon dioxide emitters.

Taking advantage of the closely-located emission sources, a single carbon dioxide transmission and storage system could be used to create a hub that efficiently shares infrastructure. The economic advantages of the hub approach add to the advantage of having a growing number of parks and economic zones. Under this model, service users also share the costs with the possibility of a short-term government subsidy if needed.

 Strong government support would enable the least-cost carbon capture and storage infrastructure development based on well-coordinated planning. The government-led approach can eliminate possible overestimation of carbon dioxide emission demand through better coordinated forecasting than a market-led approach.

Industrial facility owners have an option not to join the carbon capture and storage hub because they may opt to adopt carbon dioxide emission avoidance technologies like electrical furnaces instead of carbon dioxide capture facilities.  

The carbon capture and storage business may look challenging in developing countries, due to scarce resources, but they have inherent advantages in undertaking the challenge and international assistance is available.

The advantage of access to official development assistance resources would help developing countries overcome the challenges of insufficient finances and poorly qualified human resources.

A study focusing on financing needs of critical clean energy technologies suggests that  developing countries can plan and develop the carbon capture and storage infrastructure efficiently with support from official development assistance.

The proposed transmission and storage operator business model can use official development assistance-backed financial products, ranging from sovereign to non-sovereign loans, and revenue guarantee mechanisms.

Developing countries may also benefit from blended financing, including sovereign finance for a transmission and storage operator in case of its public nature and a non-sovereign finance or guarantee for individual carbon dioxide emitters whose carbon dioxide capture facilities would be self-financed.

Official development assistance resources can also help developing countries with risk management due to the complexity of the transmission and storage operator model. Official development assistance resources can mitigate risk with studies and pilot projects produced by top-notch international experts who can examine complicated contractual arrangements and investment risk evaluation.

The carbon capture and storage business may look challenging in developing countries, due to scarce resources, but they have inherent advantages in undertaking the challenge and international assistance is available.