1. Gas Re-injection as CDM: CCS or not? Paul ZAKKOUR ERM Energy & Climate Change

2. Overview Eligibility of reinjection projects in CDM Drawing analogues with CO2 capture and storage Should reinjection be treated same as CCS? What next for gas reinjection and CDM

3. Eligibility issues Flare reduction projects eligible in CDM – AM0009 sets precedent – 14 or so projects in pipeline (10 in India?; 2 x Nigeria; 1 x Qatar; 1 x Vietnam) – All take flare gas to market or other use Some work done on reinjection but eligibility unclear Tends to draw analogue with CO2 capture and storage (CCS)

4. Analogue with CCS CCS involves long-term/permanent isolation of CO2 from atmosphere COP12/MOP2 in Nairobi set big precedent for CCS in CDM Result not too positive, sticking points include: – Safety, legality, modalities, accounting issues etc, "PERMANENCE" – probably major item

5. CCS in CDM – Nairobi decision Request submissions of more methodologies and project design documents for CCS operations – improve understanding Range of actors to participate in regional capacity building workshops for CCS NGOs to further clarify the outstanding issues by 31st May 2007 Parties to make submissions by 21st September 2007 on outstanding issues Request SBSTA27 to prepare recommendations on CCS in the CDM for the COP/MOP3, and with a view to reaching a Decision on the matter by COP/MOP4 (2008)

6. Is CCS a good analogue? An issue largely driven by purpose of the reinjection project CO2 capture and storage Temporary CH4 storage Permanent CH4 storage Here, permanence not such an issue as we know the purpose of the project is near- term flare abatement Here, permanence could be an issue, although CH4 very different properties to CO2 Here, permanence is an issue.

7. Purpose of CH4 reinjection CH 4 temporary storage to avoid flaring in the absence of a current market for associated gas (AG), or levelise supply, then may be appropriate to consider gas storage as a flare reduction activity CH 4 permanent storage for the purpose of permanent climate change mitigation (i.e. to avoid release of CH 4 to the atmosphere), then the analogue with CCS may be considered appropriate CH 4 reinjected for enhanced oil recovery (EOR): additional issues around incremental hydrocarbon production Unclear how to handle a change in purpose

8. Current eligibility of flare projects Emissions reduction CO2 emissions Displaced emissions. These emissions still occur contemporaneously with the project, but outside of the project boundary Project emissions CDM Crediting Period Time

9. Temporary storage – is it eligible? Emissions reduction Project emissions CDM Crediting Period Reinjected gas recovered and combusted at a later date once a market is available. Emission reductions are not contemporaneous with the project

10. Other issues In respect of both AG reinjection and CCS, it is unclear what would constitute good site selection Unclear on monitoring requirements CH 4 and CO 2 have fundamentally different properties, and it is unclear whether it is credible to draw the analogue It is also unclear whether a DOE or host country regulator is sufficiently competent to approve such an application

11. Summary of issues and findings CH4 temporary storage to avoid flaring in the absence of a current market for associated gas (AG), or to levelise supply - may be appropriate to consider gas storage as a flare reduction activity CH4 permanent storage for the purpose of permanent climate change mitigation (i.e. to avoid release of CH4 to the atmosphere) - the analogue with CCS may be considered appropriate CH4 reinjected for enhanced oil recovery (EOR): additional issues around incremental hydrocarbon production Unclear how to handle a change in purpose Approvals may be a challenge on a number levels including site selection, monitoring and verification