3.3 Commercial gaps for LSIPs and other CCS projects

Although CCS technologies are competitive with alternative future large-scale technologies to reduce or avoid CO2 emissions, CCS projects are not present in many markets due to the early stage of the technology, market prices that are too low to drive investment in CCS, and a lack of incentives for CO2 abatement. CCS is also often not treated equivalently to other low-carbon technologies in terms of policy settings and government support In order to achieve emisions reductions in the most efficient way, governments should ensure CCS is not disadvantaged.

There is currently a commercial gap facing many CCS projects in the power and higher capture cost industrial sectors due to the significant incremental capital and operating costs for CCS (Figure 28).

FIGURE 28 The commercial gap facing many CCS projects

This commercial gap is a major factor limiting the development of CCS projects around the world. Leaving aside general cost reductions in CCS technologies through R&D and other development activities CCS projects have limited means to attempt to bridge the commercial gap in their business cases (Figure 29).

These means are further discussed below and can be broken into two key categories:

  • government support; and
  • additional revenue streams.

FIGURE 29 Bridging the commercial gap Commercial gap