Investors need higher returns
Carbon markets alone will not deliver CCS at scale
Volatile allowance prices and small size of voluntary market undermine ability to drive investment, says Oxford Institute for Energy Studies
Compliance and voluntary carbon markets can support the financing of CCS, but additional tools such as government-backed CfDs and other subsidies will be needed to get large-scale deployment of the technology over the line, according to the Oxford Institute for Energy Studies (OIES). Allowance price volatility has so far prevented any CCS projects from being fully financed through an emission trading scheme (ETS). The EU ETS, the world’s leading compliance market of its type, is trading at around €65/t of CO₂, having dropped sharply since peaking at about €100/t last year. In order to incentivise large-scale adoption of CCS, allowance prices need to be at a substantial premium to the cost o
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