Background and Challenge

Greenhouse gas emissions have the potential to drastically affect lives globally and significantly impact our environment. Reducing carbon dioxide (CO2) emissions is a complex problem that is currently expensive and requires unprecedented international coordination among diverse governments and industry. Carbon capture and storage (CCS) is one of the most promising solutions to mitigate fossil fuel emissions; the technology collects CO2 at large greenhouse gas sources, such as fossil fuel power plants, before it enters the atmosphere.

As part of its active role in addressing the environmental and economic challenges of climate change, the Australian government established the Global Carbon Capture and Storage Institute (Global CCS Institute) in July 2009 to accelerate the worldwide commercial deployment of at-scale CCS. The Global CCS Institute works with governments, associations and corporations to reduce CO2 emissions through collaboration and by funding targeted projects. Cognizant that CCS is a global challenge, the Australian government is pledging $100 million annually for the Global CCS Institute to make a significant impact on reducing greenhouse gas emissions.

Given the breadth and depth of the issue, the Global CCS Institute selected L.E.K. Consulting to gain a deeper understanding of the key global CCS challenges and opportunities, and to establish a framework for evaluating and funding projects.

Approach and Recommendations

L.E.K. conducted interviews with senior officials at more than 75 organizations including industry executives (i.e., energy utilities, oil & gas producers, manufacturers and services providers) and policymakers (i.e., governments, intergovernmental agencies, NGOs, research institutions and industry associations). L.E.K. then combined its industry research with additional analysis to establish an “Ideal Portfolio” of CCS projects with the greatest opportunity to drive large-scale CCS deployment by 2020.

The Ideal Portfolio framework is designed to address specific hurdles to broad-based CCS deployment – including technology, regulatory/political and financial. L.E.K.’s Ideal Portfolio also identified 26 projects based on its global research across all industries, and emphasized five priority regions. Specifically, L.E.K. determined that the power generation, iron & steel and cement production industries had the highest number of potential projects. The Ideal Portfolio also highlighted specific carbon capture technologies based on L.E.K.’s evaluation of technology, economic and market adoption factors.

Results

Building on the Ideal Portfolio framework, L.E.K. also developed an objective process to help guide Global CCS Institute policies and prioritize which CCS projects to support. In a short time, nearly 230 organizations have joined the Global CCS Institute, including some of the world’s largest countries and most prominent businesses. In addition to working closely with its members and other industry influencers, Global CCS Institute is drawing from L.E.K.’s research and tools to make strategic grants with the goal to accelerate the global reduction of emissions.