Martin Schneider
GHG Monitor
4/11/2014
International Energy Agency Chief Economist Fatih Birol this week made an emphatic cast for government incentives or a carbon price to drive development of carbon capture and storage technology, arguing that commercially available CCS is vital “if you want to make use of the fossil fuel reserves.” Speaking on the sidelines of a Center for Strategic and International Studies event on energy security after his prepared remarks, Birol told GHG Monitor that “companies have to understand that if CCS doesn’t see the light of day, some of the fossil fuel assets may remain undeveloped” for years to come. “The fossil fuels, as I said, will dominate the future but at the same time we want to reduce the CO2 emissions,” Birol said. “Therefore there is a strong need—an urgent need—to make use of CCS. However, currently CCS brings the cost of generation up and there should be some mechanisms to be provide incentives for CCS. … Because we will not get CCS in China or India—those countries wouldn’t go for it if the economics wouldn’t work. So therefore either a carbon price or a regulation from the governments are needed to pursue CCS, which is urgently needed.”
Birol went on to say that “there is a need in the U.S. and elsewhere to make the most out of the reserves because fossil fuel reserves are the most economic ones. But we have to find a way to use them in a benign way and CCS is an obvious answer.”
Birol’s comments come a week after ExxonMobil said in a report to its investors that the company is confident that none of its oil and gas reserves will become “stranded” due to current and future greenhouse gas emission reduction policies in the U.S. and abroad. Exxon noted in its report that, “One focus area of stakeholder organizations relates to what they consider the potential for a so-called carbon budget. Some are advocating for this mandated carbon budget in order to achieve global carbon-based emission reductions in the range of 80 percent through the year 2040, with the intent of stabilizing world temperature increases not to exceed 2 degrees Celsius by 2100 (i.e., the “low carbon scenario”). A concern expressed by some of our stakeholders is whether such a “low carbon scenario” could impact ExxonMobil’s reserves and operations – i.e., whether this would result in unburnable proved reserves of oil and natural gas.” However, Exxon concludes that “in assessing the economic viability of proved reserves, we do not believe a scenario consistent with reducing GHG emissions by 80 percent by 2050, as suggested by the “low carbon scenario,” lies within the ‘reasonably likely to occur’ range of planning assumptions, since we consider the scenario highly unlikely.”
