Isra-Mart srl: Durban inches towards deal to drive CCS investment

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The Durban Summit could yet result in a deal that would accelerate investment for carbon capture and storage (CCS) projects in developing countries, with one industry expert putting the chances of an agreement at around 90 per cent.

Over the weekend, the working group tasked with negotiating the potential inclusion of CCS projects in the UN-backed Clean Development Mechanism (CDM) carbon offsetting scheme approved a package of measures that will allow the new proposals to move from the negotiations' Subsidiary Body for Scientific and Technological Advice through to the full talks.

The move means that the proposals to include CCS in the CDM, which would allow projects in developing countries to sell carbon credits to help bolster the financial case for such investments, could be finalised as "clear recommendations" by the end of the week.

Writing on the Global CCS Institute's blog, Mark Bonner, principal manager of the policy, legal and regulatory team at the Institute, said that an agreement is "90 per cent there in terms of a likely positive outcome".

However, he acknowledged that two "make or break" issues still need resolving in the final week of the talks, based on who should be liable for CDM-backed CCS projects and how local environmental risks should be managed.

Brazil and the EU are said to be at loggerheads over whether the country hosting a CCS project or the country purchasing carbon offset credits from a project should be liable for the project.

Similarly, there are also differences between countries over how many carbon credits projects should hold in reserve to cover any leak of carbon emissions from underground formations during the life of a CCS project.

However, Bonner said that he remains "mildly optimistic" that an agreement can be reached this week, despite ongoing fears that a failure to break the deadlock over the future of the Kyoto Protocol could remove the legal foundations for the CDM scheme.

In other news from the Durban Summit, the US government-backed Overseas Private Investment Corporation (OPIC) announced a new $10m loan to support the rollout of clean energy projects, such as clean stoves, water purifiers and solar lighting systems.

OPIC said that it has issued the loan to Seattle-based MicroEnergy Credits, which specialises in carbon credit programmes that provide clean energy products to low-income micro-borrowers around the world.

"Making clean energy technology available to individual micro-borrowers and micro-entrepreneurs on a widespread basis is an important - and often overlooked - part of the international effort to reverse climate change," said OPIC president and chief executive Elizabeth Littlefield.

"This landmark project has the potential to transform low-income populations' access to affordable clean energy products, and in the process improve their health and prospects for economic growth. Partnering with MicroEnergy Credits to deliver innovative financing through the use of carbon credits only makes the project more remarkable."

The project is part of a growing trend that has seen investors attempt to generate carbon offset credits by supporting development projects that also help curb emissions, such as initiatives to roll out cleaner and more efficient cooking stoves or solar lighting systems for off-grid families.

The UN has also been working to streamline the CDM to make it easier for such projects to issue carbon credits that have been approved by the UN-backed offset market.