Carbon Capture And Storage In Asia

Climate change risk and greenhouse gas emissions reductions are now at the top of many investors’ agendas.The noticeable increase of net zero emissions commitments from large corporate emitters over the past two years have signaled some progress across Asia through the mainstreaming of climate change issues. To further support investors engaging with portfolio companies, a deeper understanding of decarbonization pathways presented by portfolio companies is necessary for investors as for many sectors, the pathways to decarbonization are not always straightforward. Regional policies, technologies and investments available will affect the trajectory of change.

There still exists great uncertainty on the trajectory of limiting temperature rise in line with the Paris Agreement, which requires a complex mix of policies, technologies, and investments. For many industrial sectors with heavy carbon emissions, such as thermal power and steel, the large-scale deployment of CCS is a key assumption underlying these sectors decarbonisation pathways, and its validity or invalidity would have significant consequences. To bridge the emissions gap, the projected CCS capacity requirements are normally presented in an order of magnitude greater than the present capacity.

Climate Action 100+, a global investor initiative currently with more than 615 investors, responsible for over USD60 trillion in assets under management and engaging on climate change, have launched global sector strategies featuring different sector papers on decarbonization expectations. The papers for the steel3 and power4 sectors were released in Q3 and Q4 2021 respectively, with a view to map the transition to net zero and identify priority actions required. In both papers, CCS and carbon capture, utilization and storage (CCUS) were referenced as early-stage technologies that companies would consider as part of their decarbonization strategy.

For steel companies, any opportunities and scale of CCS and CCUS identified to be deployed for the company should come with specifications in as much detail as is practically possible the role expected of the emerging technology. For power companies, there are clear expectations for companies to map out a clear decarbonization strategy that minimizes reliance on CCS and CCUS.

This report aims to triangulate the reasoning of narratives where assumptions for CCS are being deployed to varying extents as part of corporate decarbonization strategies. By providing a sector-level analysis of the prospect of CCS deployment, complemented with country perspectives, the report examines the cost competitiveness of CCS and seeds questions for investors to ask of companies with regards to their approach with CCS deployment. This is increasingly relevant as engagements in the region begin to deepen into the understanding of decarbonization pathways set out by companies and the role of various technologies such as CCS. With the backdrop of increasing commitments to phase down coal as codified in the Glasgow Climate Pact in COP26, and eventually to phase out of coal and other fossil fuels, the role of CCS in the decisive decade to decarbonize has become a discussion of critical importance.

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