Main sectors: ENERGY and CLIMATE CHANGE
One of the greenhouse gas mitigation measures being explored in South Africa is Carbon Capture and Storage (CCS). In CCS, carbon dioxide is captured at the site of generation (such as a power station or industrial process), compressed and pumped deep underground or under the ocean into geological formations for long-term storage.
At the time of conducting this project, South Africa was developing the structure for the carbon tax. This study was conducted to explore what impacts the introduction of the tax would have on the financial performance of CCS as a mitigation option.
The Green House approach:
The Green House built a comprehensive financial projection model for CCS, including all stages of capture, transport and injection/storage, using previous studies and the open literature as a basis. The impacts of various carbon tax designs on tax burden incurred by various companies generating emissions was then calculated, under a range of cost uncertainties.
The Green House component of the work was complemented by a detailed review of experiences on carbon pricing and CCS, conducted by DNA Economics.
The study demonstrated the savings that could be achieved on the carbon tax by implementing CCS, taking into account both capital and operating costs. The study provided members of the South African Centre for Carbon Capture and Storage (SACCCS) with a better understanding of the impacts of the carbon tax on the financial performance of CCS. The information also provided a platform for engagement with government on the final tax design.