Cross-border carbon capture and storage can be an essential part of the Asia Pacific decarbonisation journey – but a flexible approach will be required and collaboration between government and industry will be key.
That was the prevailing view of panelists at the recent Asia Natural Gas And Energy Association (ANGEA) webinar: Accelerating Cross-Border CCS in Asia Pacific.
The webinar drew on the 2024 study of the same name and was opened by ANGEA CEO Paul Everingham, who highlighted the need for a common framework that could help to guide cross-border CCS agreements that were starting to take shape in the region.
Chair of the study working group, Casey Delhotal from ExxonMobil, then outlined the project’s origins, methodology and recommendations, before Rachit Agarwal and Min Ai Kok from study partner Boston Consulting Group provided detailed analysis of technical aspects of the study around rights of emissions reductions and liability for leakages.
The Q&A session that followed was a real highlight. With an expanded panel that included Alex Zapantis from the Global CCS Institute and Carl Clayton from BCG’s Dubai office, there were some strong insights into future pathways for cross-border CCS in Asia Pacific.
Among the notable responses to audience questions:
Casey Delhotal on the need for government and industry collaboration:
“These are very expensive projects, to the tune of billions of dollars. If you add a huge amount of costs in terms of compliance, you could actually prevent some of these projects from going forward. The other thing is the ease of compliance. We want to meet the objectives. We want to make sure there’s no double-counting [of emissions]. We want to make sure that there’s a sense of integrity around the process. But you can go overboard and be too prescriptive with the compliance. Regular consultations with industry are going to be very important in getting sort of striking the right balance between implementation costs and meeting the objectives of the agreements.”
Carl Clayton on drawing on lessons from other parts of the world for Asia Pacific:
“If you consider Northern Lights as the key cross border development [globally] – where we were able to draw some references, was on the way that the value chain has been structured and set up. But some of the key areas and challenges, where we don’t have the consistency on in Asia Pacific, is that within the EU framework, especially between Norway and the rest of Europe [in the example of the Northern Lights project], you have the ETS [Emissions Trading System]. So, there is already a common carbon pricing system.
There is already a common carbon trading mechanism, meaning that some of the challenges are essentially resolved for. Then you have a common directive across the EU for the management of CO2 and CO2 storage. Some of those commonalities that we are not going to be able to achieve in APAC are good as references. But essentially what meant that we needed to do as a team was to go under the sort of hood of some of those challenges, to try and unpick and unpack what other areas you could look to try and keep consistent between emitting countries and storing countries within Asia Pacific.”
Alex Zapantis on the responsibility of certifying the amount of CO2 captured and stored:
“When it comes to certifying CO2 which is captured and stored, I think the starting point is that it will mostly be the purview of the regulator in each country. So in the capture country, there will be a regulator that deals with carbon accounting and carbon reporting , and they will need to have methodologies in place, and probably an independent verification process with audit as well, to confirm that the CO2 has not been emitted – it has, in fact, been captured instead. Similarly, in the storage country, the most common approach would be for the regulator of storage and the regulator of carbon accounting in that country, to have processes in place to confirm that CO2 has actually been stored.
The way that I see it playing out is the regulators in each country have the primary roles there in developing, if necessary, and applying the relevant methodologies, then requiring the operators to report against those methodologies, and then also having an independent verification process, as you would with any compliance requirement. And of course, all of this needs to comply with global norms and standards around carbon accounting.”
Min Ai Kok on the transfer of emissions accounting between emitting and storing countries:
“I think we have to be very clear that the handover point is different from a title transfer point. The title transfer point is typically at the project level. It can be from the shipping operator to the storage operator, all of these could be different entities and once they pass over the CO2 vessel to the other, that would be a title transfer point. That’s very much at the project level. That does not determine how emissions accounting work at a government-to-government level. There could be implications of that title transfer point on emissions accounting for both governments, where they might say that because we need to hand over at this certain point, that point needs to be clearer in terms of which operator is responsible for the leakage, so that they can assign responsibility of the leakage to that specific operator.
But the title transfer point is really different from the handover point from government to government. That needs to be decided within a G2G agreement versus the title transfer point, which is within the commercial agreement, where each operator determines, at which point do they hand over that responsibility.”
