TRANSITION-RISK AND OPPORTUNITY FOR CAPTURING AND STORING CO2

Abstract

For humanity to combat climate change, urgent decarbonization measures are required. The IPCC’s AR6 report estimates with improved accuracy that a overshooting a limited carbon budget is likely if no urgent measures of emission reduction are taken. Fossil, as well as biogenic Carbon Capture and Storage technologies are deemed the most techno-economic and cost-efficient to ensure large-scale emissions reduction and even have potential for negative emissions. Adequate uptake of these technologies is lacking due to lack of risk assessment tools. The Taskforce for Climate-related Financial Disclosures made a framework for financial and non-financial companies describing ‘transition risk’ to provide a holistic understanding of all non-physical climate risks for the assessment of investment. Transition risk, as well as opportunity were researched in relation to CCS and BECCS to develop a supplemental assessment for the TCFD’s framework (TCFD, 2017b). Literature research and expert interviews provided the foundation for this assessment, after which results were tested on case-studies concerning Drax, Porthos, Shell and Alco Energy. The final result describes a set of parameters specifically tailored to the technologies of CCS and BECCS focussed on investors and project developer in the EU. These parameter reflect that transition risk can be the cause of investments becoming stranded assets, but can also result in resilience against future transition risk. The EU ETS can stimulate the potential for a business case. This research adds to close the discrepancy of translating climate risk towards targets and metrics for companies and investors that consider CCS and BECCS.