Bridging the Finance Gap for Carbon Capture and Storage

Carbon capture and storage (CCS) is a technically feasible technology that can be deployed to reduce CO₂ emissions from power plants and industrial sources. In the long run, CCS is also expected to lower the cost of climate change mitigation. However, because first-of-a-kind (FOAK) projects present significant economic and technical uncertainties, government support in the demonstration phase is critical to the eventual widespread deployment of CCS. The current policy support mechanisms for CCS, which include R&D funding, grants, and tax credits, do not provide sufficient economic incentive for project developers. I will use two large-scale CCS power plant projects, the Kemper integrated gasification combined cycle (IGCC) plant and the Parish post-combustion retrofit, as case studies to evaluate financing options for CCS. Based on this analysis, I will identify actions that public and private sector actors can take to allocate risks and benefits in a way that promotes the development of CCS.