Xi Liang

Stakeholder Views on Financing Carbon Capture and Storage Demonstration Projects in China

Chinese stakeholders (131) from 68 key institutions in 27 provinces were consulted in spring 2009 in an online survey of their perceptions of the barriers and opportunities in financing large-scale carbon dioxide capture and storage (CCS) demonstration projects in China. The online survey was supplemented by 31 follow-up face-to-face interviews. The National Development and Reform Commission (NDRC) was widely perceived as the most important institution in authorizing the first commercial-scale CCS demonstration project and authorization was viewed as more similar to that for a power project than a chemicals project. There were disagreements, however, on the appropriate size for a demonstration plant, the type of capture, and the type of storage. Most stakeholders believed that the international image of the Chinese Government could benefit from demonstrating commercial CCS and that such a project could also create advantages for Chinese companies investing in CCS technologies. In more detailed interviews with 16 financial officials, we found striking disagreements over the perceived risks of demonstrating CCS. The rate of return seen as appropriate for financing demonstration projects was split between stakeholders from development banks (who supported a rate of 5-8%) and those from commercial banks (12-20%). The divergence on rate alone could result in as much as a 40% difference in the cost of CO(2) abatement and 56% higher levelized cost of electricity based on a hypothetical case study of a typical 600-MW new build ultrasupercritical pulverized coal-fired (USCPC) power plant. To finance the extra operational costs, there were sharp divisions over which institutions should bear the brunt of financing although, overall, more than half of the support was expected to come from foreign and Chinese governments.

Getting Ready for Carbon Capture and Storage by Issuing Capture Options

A capture option is an option contract where the option holder can exercise a contract to retrofit an existing fossil fuel plant to capture carbon dioxide (CO2) on or before a fixed date. We suggest that new thermal power plants, particularly those in developing countries, consider issuing capture options at the design stage, because the sellers—the owners of newly built thermal power plants—may then invest in making these plants CO2 capture ready (CCR) to optimise returns from selling capture options. In a detailed case study on a 600 MW ultrasupercritical pulverised coal-fired power unit a potential storage site in Guangdong, China, the value of a capture option and CCR investment is evaluated using the backward deduction option pricing method through a stochastic cash flow model with Monte-Carlo simulations. If the power plant is retrofittable without CCR investment, then for an 8% discount rate the value of a capture option is US

Financing Capture Ready Coal-Fired Power Plants In China By Issuing Capture Options

11 million before CCR investment. Investing US

Resolving the Tension between CCS Deployment and Chinese Energy Security

3.8 million in CCR increases the value of the capture option by an estimated US

A Preliminary Simulation of CO2-EOR and Storage in One Heavy Oil Carbonate Oilfield Offshore Guangdong, China

12 million. Perhaps more important from a policy point of view, CCR investment can reduce the odds of early closure by 20% and also increase the chance of retrofitting to capture by 43%. If the power plant is not retrofittable in the absence of CCR design modifications, CCR investment to avoid ‘carbon lock-in’ is not only important for climate policy but is also economic from an investment point of view. We also conduct sensitivity analyses on a range of key assumptions to test the robustness of the findings.

Stakeholder Views on Interactions between Low-carbon Policies and Carbon Markets in China: Lessons from the Guangdong ETS

‘Capture Ready’ is a design concept enabling fossil fuel plants to be retrofitted more economically with carbon dioxide capture and storage (CCS) technologies, however financing the cost of capture ready can be problematic, especially in the developing world. We propose that fossil fuel plants issue tradable Capture Options to acquire financing. The Capture Option concept could move CCS forward politically in countries such as China, speed up CCS technology development, help Capture Ready investors diversify risk, and offer global warming investors an alternative investment opportunity. As a detailed case study, we assess the value of a Capture Option and Capture Ready plant for a 600 MW supercritical pulverized coal power plant in China, using a cash flow model with Monte-Carlo simulations. The gross value of Capture Ready varies from CNY3m (

Study of a roadmap for carbon capture and storage development in Guangdong Province, China

0.4m) to CNY633m (

Strategies for Financing Large-scale Carbon Capture and Storage Power Plants in China

84.4m) at an 8% discount rate and the Capture Option is valued at CNY113m (

Perceptions of opinion leaders towards CCS demonstration projects in China

15.1m) to CNY1255m (

Assessing the value of CO2 capture ready in new-build pulverised coal-fired power plants in China

167.3m) for two of the four scenarios analyzed.