1.1 Project Background

Future demand for coal for power generation in the APEC region is expected to rise dramatically, in contrast to other fossil fuels. The 2009 APEC Energy Outlook1 indicates that power generation from coal will rise from 5,300 TWh in 2005 to 8,600 TWh in 2030, with the share of coal in the power sector expected to further increase, particularly in developing APEC economies2.

Overall, coal and oil are expected to remain as the dominant sources of primary energy supply for APEC economies. APEC economies are considering coal as an important option because of the large and well-dispersed coal reserves, existing large installed base of coal-production capacity, low-cost and stable economics associated with coal, and the availability of a range of advanced power generating technologies that can limit the environmental impacts of coal. Furthermore, in many of the APEC developing economies, concerns about energy security is also driving a push towards utilizing domestic resources, which is often coal.

At the same time, coal is a high-carbon fuel and increased use of coal employing current coal combustion or gasification technologies implies a higher rate of carbon dioxide (CO2) emissions. Increasing atmospheric concentrations of CO2 and other greenhouse gases are very likely a primary cause of rising global temperatures.3 Mitigating global warming will require deep reductions in global CO2 emissions, especially from coal use. Therefore, technologies that enable us to capture and store CO2 emissions from coal are critical if we wish to continue the use of coal, while at the same time minimizing CO2 emissions to the atmosphere. APEC Leaders have also acknowledged that challenges of economic growth, energy security and climate change are fundamentally interlinked, and agreed to promote policies for cleaner coal use and carbon capture and storage (CCS) technologies in their Sydney declaration.4

Although CCS technologies are not yet fully commercial, parts of the technology are already commercial, and there are global efforts to demonstrate the technology on a large scale. Indeed, the key challenges lie in integration and technology risk-reduction through large-scale demonstration projects. The APEC developing economies have pledged to cooperate on joint research, development, demonstration, deployment and transfer to CCS technologies, although their engagement will likely be based on the differences in economic and social conditions among the economies and be consistent with the common but differentiated responsibilities and respective capabilities of these economies.4

Many APEC developing economies are planning to build new coal-fired power plants in the future, and CCS is an option that can be relevant in the medium-to-long term as the demand for significant (>90%) reductions in GHG emissions becomes warranted. Although the Asia Pacific Energy Research Centre's (APERC) Business-As-Usual scenario does not envision a role for CCS before 2030,5 the International Energy Agency's (IEA) 450 Scenario6 expects that about 7% of the low-carbon electricity in APEC economies in 2030 will be from CCS.7

Furthermore, the depletion of oil and gas fields across the globe has given a new impetus to CO2-based enhanced oil recovery (EOR) techniques that help to prolong the life of hydrocarbon extraction and recover additional hydrocarbons from existing oil and gas fields, while at the same time storing CO2. This EOR technique is often considered to be an important step in the demonstration of long-term CO2 storage techniques.

In view of the above, the APEC Experts Group on Clean Fossil Energy (EGCFE) has focused over the past decade on assessing and promoting the role of CCS in APEC economies. The EGCFE has undertaken a series of activities with the goal to build capacity within APEC developing economies to understand the technology, its potential and its challenges, so that policymakers can consider CCS as part of their medium-to-long term energy strategies.

1http://publications.apec.org/publication-detail.php?pub_id=946

2 APEC developing economies include: Brunei Darussalam; Chile; People's Republic of China; Hong Kong, China; Indonesia; Malaysia; Mexico; Papua New Guinea; Peru; The Republic of the Philippines; Singapore; Chinese Taipei; Thailand; Viet Nam.

3 Fourth Assessment Report, IPCC, 2007.

4http://www.apec.org/apec/leaders__declarations/2007/aelm_climatechange.html

4http://www.apec.org/apec/leaders__declarations/2007/aelm_climatechange.html

5http://www.ieej.or.jp/aperc/2009pdf/Outlook/Outlook_Volume_I_4E.pdf

6 The IEA 450 Scenario from the IEA's World Energy Outlook 2009 sets out an energy pathway consistent with limiting the increase in temperature to 2° C, thereby allowing the concentration of atmospheric CO2 to be stabilized at less than 450 ppm.

7http://www.ieej.or.jp/aperc/2010pdf/PES.pdf