Stakeholder Views on Financing Carbon Capture and Storage Demonstration Projects in China

Chinese stakeholders (131) from 68 key institutions in 27 provinces were consulted in spring 2009 in an online survey of their perceptions of the barriers and opportunities in financing large-scale carbon dioxide capture and storage (CCS) demonstration projects in China. The online survey was supplemented by 31 follow-up face-to-face interviews. The National Development and Reform Commission (NDRC) was widely perceived as the most important institution in authorizing the first commercial-scale CCS demonstration project and authorization was viewed as more similar to that for a power project than a chemicals project. There were disagreements, however, on the appropriate size for a demonstration plant, the type of capture, and the type of storage. Most stakeholders believed that the international image of the Chinese Government could benefit from demonstrating commercial CCS and that such a project could also create advantages for Chinese companies investing in CCS technologies. In more detailed interviews with 16 financial officials, we found striking disagreements over the perceived risks of demonstrating CCS. The rate of return seen as appropriate for financing demonstration projects was split between stakeholders from development banks (who supported a rate of 5-8%) and those from commercial banks (12-20%). The divergence on rate alone could result in as much as a 40% difference in the cost of CO2 abatement and 56% higher levelized cost of electricity based on a hypothetical case study of a typical 600-MW new build ultrasupercritical pulverized coal-fired (USCPC) power plant. To finance the extra operational costs, there were sharp divisions over which institution’s should bear the brunt of financing although, overall, more than half of the support was expected to come from foreign and Chinese governments.