Compensation vs. reduction of CO₂ – What role does CO₂ removal play as an alternative to traditional CO₂ reduction measures?
As part of the “CCUS Development Pathways” project, the FfE investigated the role of technical CO₂ capture methods in the context of future climate strategies on behalf of Bayernwerk, Gunvor Raffinerie Ingolstadt, RWE, and Stadtwerke Rosenheim. The possibility of purchasing negative certificates from such CO₂ capture methods (= CO₂ compensation) was compared with measures to reduce emissions directly at source (= CO₂ reduction). The publication is intended to provide a classification in the public discourse as to what role negative emission certificates will play in the future. It also provides an initial classification for companies as to whether CO₂ compensation through the purchase of negative certificates is the cheaper alternative to traditional CO₂ reduction measures.
The analysis in the white paper covers…
• which CO₂ removal methods are suitable for “genuine offsetting” from a regulatory perspective
• the potential volumes of CO₂ removal methods and the associated costs
• how the costs of removal methods and thus the prices for negative emission certificates fit into a CO₂ reduction cost curve
Key messages
- Bioenergy Carbon Capture and Storage (BECCS) and Direct Air Carbon Capture and Storage (DACCS) are the most promising CO₂ removal methods for foreseeable integration into the EU ETS. This means that they represent a “genuine alternative” in the form of CO₂ compensation rather than CO₂ reduction at the company’s own site for companies subject to the ETS.
- Despite expected cost degression, significant uncertainties and high costs remain along the entire value chain for BECCS and DACCS (see Figure 1). As a result, prices for CO₂ compensation through BECCS and DACCS also remain at a high level.
- Negative certificates have their justification – offsets can reduce the costs of climate neutrality in a limited range of applications: When the costs of BECCS and DACCS are plotted on a CO₂ reduction cost curve, it becomes apparent that CO₂ offsetting is a cost-effective alternative to expensive CO₂ reduction measures. Accordingly, purchasing negative emissions certificates instead of using synthetic fuels can reduce the costs for industry on the path to climate neutrality.
Translated with DeepL.com (free version)
Conclusion
Although direct CO₂ reduction at the source of emissions remains the top priority, certifiable negative emissions can be an economically viable supplement—especially for residual emissions that are difficult to avoid. BECCS and DACCS are particularly suitable for this purpose due to their precise quantifiability and permanence. However, both technologies are associated with high costs and considerable uncertainty in terms of cost development. Plotting the costs on a CO₂ reduction cost curve shows that offsetting can only be a cost-effective alternative to direct reduction in selected cases, such as when using synthetic fuels.
Interested?
Has your company already considered CO₂ compensation for residual emissions, and would you like a more in-depth analysis of which CO₂ reduction measures could be economically replaced by purchasing negative emission certificates?
Or are you yourself a player in the negative emissions value chain and would like to see a specific CO₂ removal method classified in the context of the energy industry and the willingness of potential customers to pay for it? Feel free to contact us!
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