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High hopes for climate change talks in Qatar

By Julian Hunt

We have learnt to expect surprises at UN climate change summits. At Durban, a year ago, there was the unexpected, but welcome, agreement to begin negotiations on a new legally binding instrument involving all major emitters of greenhouse gases, to be finalised by 2015, and to take effect in 2020.

At Copenhagen and Cancun, in 2009 and 2010 respectively, negotiators, to the surprise of many, abandoned "Plan A'' for an international emission control agreement in favour of "Plan B'' (of the Danish Prime Minister) including 2020 "pledges'' and an information exchange agreement between countries about emissions.

The unanticipated may also be in store this year with Qatar, as host, probably looking for a big initiative to underline its credentials on the world stage.

The summit, which begins today, represents an unparalleled opportunity to engage Gulf states. With their fossil fuel-wealth and growing technological and research strengths, Gulf states could transform the international climate change strategy. Yet, as a group, they have been largely ignored.

So what might a "game changing'' contribution from Gulf states to the climate negotiations look like?

They could lead development and funding of Carbon Capture and Storage (CCS) technology to capture and store the greenhouse gas exhausts from the combustion of fossil fuels and prevent their emission into the atmosphere.

CCS is important. There is no credible scenario, without this technology, under which emissions can be sufficiently reduced over the next 30 years to limit global average temperature rise to within about three degrees Celsius by 2100, well above the agreed UN goal of two degrees Celsius.

Storage of carbon dioxide in rock where oil and water have been extracted is well established. Although plans are being discussed in many countries, only a few, including China and Norway, have experience of industrial level pilots for extracting carbon dioxide from exhaust gases from power plants.

The overall costs of CCS have been estimated as comparable to the extra costs of renewable energy. However, CCS has the advantage of not being dependent on weather, and is particularly applicable in countries that rely on coal like China and India.

In the long-term, CCS will only be viable in market economies if sufficient costs are imposed on installations that emit carbon.

Estimates suggest that, once CCS technology is mature, a carbon price of between US$44 and US$103 will be sufficient to make CCS viable. The current price of carbon in the EU (the world's major carbon market) is much lower.

However, a tightening of the cap on emissions from 2013 means that the EU carbon price is on an upward trajectory and, conceivably, could reach this critical price band. Moreover, recent laws and proposals to create carbon markets in Australia, China, Mexico, South Korea and California indicate a global trend towards pricing carbon as a policy tool.

Achieving CCS in the short-to-medium-term requires big capital investments to build the commercial scale demonstration projects that will help to bring down costs. With uncertainty about regulations and the future price of carbon, plus fiscal constraints on most governments and businesses, investments have not yet been forthcoming.

However, this could soon change dramatically.

First, the regulatory outlook is more certain. The Kyoto Protocol has been extended and it is more likely that there will be stricter carbon constraints on all major countries after 2020, reducing the regulatory risk of investment in CCS.

Second, Gulf states have a growing incentive to commercialise CCS, possibly using their massive Sovereign Wealth Funds. Because CCS eliminates emissions of greenhouse gases, it potentially makes fossil fuel markets environmentally sustainable, even in a highly carbon constrained post-2020 world. Once commercialised, CCS technology will be exportable, creating new jobs.

Third, in China, the world's second largest economy, planning is underway for a timetable for emissions reductions under a post-2020 climate change deal. It is in fossil-fuel dependent China's interest to commercialise CCS and other advanced technologies. With rapid economic growth leading to construction of many fossil-fuel power stations, that are mostly coal-fired, large demand for CCS should soon bring down costs.

As well as China and Gulf States, the EU, the world's largest carbon market, would also support progress on the CCS agenda. Driving down costs of CCS would help those countries, like Poland and the Czech Republic, that rely on coal and, as a result, act as a brake on Europe's overall ambition on tackling climate change.

Taken overall, the opportunity is crystal clear. And, if Qatar is looking for something big to showcase its credentials on the world stage, this may be it.

• Terry Townshend, Director of Policy at GLOBE, co-wrote this article. Lord Julian Hunt is Visiting Professor at Delft University, and

former director-general of the UK Met office.

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