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Carbon Capture and Storage (CCS) technology could provide a technological bridge for achieving near to midterm GHG emission reduction goals. Integrated CCS technology is still under development and has noteworthy challenges, which would be possible to overcome through the implementation of large-scale demonstration projects. In order to assist developing countries to better understand issues related to potential technology deployment, there is a need to start analyzing various numerous challenges facing CCS within the economic and legal context of developing countries and countries in transition. This report is the first effort of the World Bank Group to contribute to a deeper understanding of (a) the integration of power generation with CCS technologies, as well as their costs; (b) regulatory barriers to the deployment of CCS; and (c) global financing requirements for CCS and applicable project finance structures involving instruments of multilateral development institutions. This report does not provide prescriptive solutions to overcome these barriers, since action must be taken on a country-by-country basis, taking account of different circumstances and national policies. Individual governments should decide their priorities on climate change mitigation and adopt appropriate measures accordingly. The analyses presented in this report may take on added relevance, depending on the future direction of international climate negotiations and domestic legal and policy measures in both developed and developing countries, and how they serve to encourage carbon sequestration. We expect that this report will provide insights for policy makers, stakeholders, private financiers, and donors in meeting the challenges of the deployment of climate change mitigation technologies and CCS in particular.

Carbon Capture and Storage (CCS) technology could provide a technological bridge for achieving near to midterm GHG emission reduction goals. Integrated CCS technology is still under development and has noteworthy challenges, which would be possible to overcome through the implementation of large-scale demonstration projects. In order to assist developing countries to better understand issues related to potential technology deployment, there is a need to start analyzing various numerous challenges facing CCS within the economic and legal context of developing countries and countries in transition. This report is the first effort of the World Bank Group to contribute to a deeper understanding of (a) the integration of power generation with CCS technologies, as well as their costs; (b) regulatory barriers to the deployment of CCS; and (c) global financing requirements for CCS and applicable project finance structures involving instruments of multilateral development institutions. This report does not provide prescriptive solutions to overcome these barriers, since action must be taken on a country-by-country basis, taking account of different circumstances and national policies. Individual governments should decide their priorities on climate change mitigation and adopt appropriate measures accordingly. The analyses presented in this report may take on added relevance, depending on the future direction of international climate negotiations and domestic legal and policy measures in both developed and developing countries, and how they serve to encourage carbon sequestration. We expect that this report will provide insights for policy makers, stakeholders, private financiers, and donors in meeting the challenges of the deployment of climate change mitigation technologies and CCS in particular.

This report assesses some of the most important barriers facing Carbon Capture and Storage (CCS) deployment within the context of developing and transition economies. The selection of the case studies is based on several criteria, including the level of reliance on fossil fuels for power generation and the level of interconnection of electricity networks. The case studies selected for this analysis are the Balkans and Southern African regions. Many countries within the Balkan region are considered transition economies, a status recognized as different from middle-income and low income developing countries. However, for the purposes of this report, countries within both regions are referred to as developing countries. The report presents the results of a model developed to investigate ways of structuring financing for power generation facilities equipped with CCS in the developing world, using instruments available from multilateral development banks and commercial financiers, as well as concessional funding sources. The objective is to assess whether a combination of such instruments could result in reductions in the overall cost of financing. The model calculates the resulting Levelized Cost of Electricity (LCOE), and includes numerous variable parameters, such as coal prices, CO2 prices, and potential revenues from selling oil and gas obtained through enhanced hydrocarbon recovery. Common theme found throughout the analyses is that there could be potential for CCS deployment in the regions under consideration. Lower-cost opportunities, for example, in sectors practiced in handling CO2, such as gas processing, or where extra revenues could be made available from enhanced hydrocarbon recovery, could provide platforms for the first CCS projects in developing countries. However, broader CCS deployment is contingent upon a number of factors, including an availability of a mix of sources of finance from public funds and carbon market mechanisms, as well as concessional financing sources. In parallel, financing should be supported by legal and regulatory frameworks not only to define mechanisms for access to concessional and climate finance, but also to reduce investor risk and create market drivers to leverage all available sources of domestic and international support

This report assesses some of the most important barriers facing Carbon Capture and Storage (CCS) deployment within the context of developing and transition economies. The selection of the case studies is based on several criteria, including the level of reliance on fossil fuels for power generation and the level of interconnection of electricity networks. The case studies selected for this analysis are the Balkans and Southern African regions. Many countries within the Balkan region are considered transition economies, a status recognized as different from middle-income and low income developing countries. However, for the purposes of this report, countries within both regions are referred to as developing countries. The report presents the results of a model developed to investigate ways of structuring financing for power generation facilities equipped with CCS in the developing world, using instruments available from multilateral development banks and commercial financiers, as well as concessional funding sources. The objective is to assess whether a combination of such instruments could result in reductions in the overall cost of financing. The model calculates the resulting Levelized Cost of Electricity (LCOE), and includes numerous variable parameters, such as coal prices, CO2 prices, and potential revenues from selling oil and gas obtained through enhanced hydrocarbon recovery. Common theme found throughout the analyses is that there could be potential for CCS deployment in the regions under consideration. Lower-cost opportunities, for example, in sectors practiced in handling CO2, such as gas processing, or where extra revenues could be made available from enhanced hydrocarbon recovery, could provide platforms for the first CCS projects in developing countries. However, broader CCS deployment is contingent upon a number of factors, including an availability of a mix of sources of finance from public funds and carbon market mechanisms, as well as concessional financing sources. In parallel, financing should be supported by legal and regulatory frameworks not only to define mechanisms for access to concessional and climate finance, but also to reduce investor risk and create market drivers to leverage all available sources of domestic and international support. Tables, Figures, Appendixes, References.