Policy mechanisms for supporting deployment of engineered greenhouse gas removal technologies

Element Energy was commissioned to undertake an analysis of the range of policy mechanisms that could be used to incentivise deployment of engineered GGRs from the early stages involving ‘first of a kind’ projects to the point of industry maturity.

There is a range of market failures that need to be addressed to support deployment of engineered GGRs, with the primary market failure being the carbon externality. Developers of engineered GGRs also face several project risks that will have an impact on incentivising  investment in the technologies.

Element Energy applied assessment criteria to evaluate a long list of policy mechanisms and identified a short list of feasible policy options that could support deployment of GGRs. Two are standalone market-based options – Negative Emissions Credits in the UK Emissions Trading System and a Carbon Dioxide Removal Market with Obligations. These will more likely support GGR deployment in the long term. Two contract-based options – the Dual Contract Subsidy and Carbon Contract for Difference – are also proposed. These could be used for a maturing GGR sector, while also being applicable to support deployment of ‘first of a kind’ projects. The report also presents complementary and enabling policies that can enhance the implementation of the proposed policy options.

The research informed the final report of the Commission’s study on greenhouse gas removals.

Download report