How to include CCS in the CDM? Baseline methodologies and institutional implications.

The inclusion of CO2 capture and storage (CCS) in the Clean Development Mechanism (CDM) has turned out highly controversial. A range of concerns will need to be addressed to ensure safety and greenhouse gas integrity of CCS operations under the CDM, notably related to the integrity of geological storage sites, monitoring and site development, and long-term liability. This report consists of two parts. In Part A, two routes are explored to enable CCS in the CDM. Firstly, dilemmas encountered in the development of baseline methodologies for CCS projects are discussed, including problems related to the energy penalty, changes in the load factor of retrofit plants, and an increased consumption of fossil fuels from enhanced hydrocarbon recovery operations. Secondly, a number of institutional arrangements will be necessary to guarantee long term storage of CO2. These include the establishment of a CCS panel to evaluate compliance with requirements for site selection, monitoring and site development. Such requirements may be laid down in a COP/MOP decision and in more detail in the applicability conditions of baseline methodologies. Furthermore, a special accreditation for Designated Operational Entities (DOEs) validating and verifying potential CCS projects under the CDM is recommended. In Part B three illustrative baseline methodologies for hypothetical CCS operations under the CDM are elaborated using a template provided by the UNFCCC Secretariat. The hypothetical CCS operations included (1) capture of CO2 from a coal-fired power plant and its use in a newly developed enhanced coal bed methane recovery; (2) capture of CO2 from a newly built pulverized coal plant and its subsequent storage in depleted oil or gas fields or saline formations; and (3) capture of CO2 from a natural gas processing plant and its storage in depleted oil or gas fields or saline formations. Furthermore, three annexes to each of these three illustrative methodologies are proposed that hold suggested applicability conditions for the methodologies. They comprise requirements and criteria with respect to site selection, monitoring, site development and liability. Version of 19 December