1. www.perspectives.cc · michaelowa@perspectives.cc © 2014 Perspectives GmbH The UNFCCC market mechanisms – an effective tool to mobilize deployment of CDR? CEC 2014, Berlin, 20 August 2014 Axel Michaelowa University of Zurich, axel.michelowa@pw.uzh.ch Perspectives, michaelowa@perspectives.cc

2. www.perspectives.cc · michaelowa@perspectives.cc © 2014 Perspectives GmbH Topics  Coverage of various mitigation options by market mechanisms  The role of market mechanisms in mitigation  Carbon capture and storage in the market mechanisms  Markets and CDR: an outlook www.perspectives.cc · michaelowa@perspectives.cc

3. © 2014 Perspectives GmbH Coverage by market mechanisms www.perspectives.cc · michaelowa@perspectives.cc Emission reduction Carbon capture and storage from emission sources Air capture and sequestration Biological sequestration Solar radiation management “Classical” mitigation Climate engineering Renewables Fuel switch GHG destruction Energy efficiency Geological Vegetation on land Ocean Surface Atmospheric Stratospheric Space Products      

4. www.perspectives.cc · michaelowa@perspectives.cc © 2014 Perspectives GmbH The role of market mechanisms  Various mechanisms (ETS, offsets)  Fast take-off  Price crash since 2011  Fragmentation

5. www.perspectives.cc · michaelowa@perspectives.cc Lessons from CCS  CCS in CDM took a long time for rule-setting (2005-11)  Triggered by methodology submissions  Concerns about permanence of sequestration  Offset reserve  Site selection criteria  Comprehensive risk and safety assessment  Monitoring over at least 30 years, of which 10 years without seepage  Liability for eventual reversal of sequestration  Allocation to seller after end of monitoring  Prohibitive costs of CCS / CDR  CCS is two orders of magnitude more expensive than current price  No methodology or project submission after 2011  Technical CDR is three orders of magnitude more expensive

6. www.perspectives.cc · michaelowa@perspectives.cc © 2014 Perspectives GmbH Markets and CDR  Sufficient demand required to increase market prices  Three orders of magnitude above current levels extremely unlikely  Would require massive strengthening of emissions commitments  Sufficient technical progress in CDR required to reduce costs massively  Possibly one order of magnitude?  Monitoring and liability rules: learn from CCS in CDM  International regulation!  Detailed safeguards for site selection and  Time where liability reverts to seller  Can markets play a role in SRM?  Costs much lower than for CDR – market would be attractive  Temporary nature of credits? www.perspectives.cc · michaelowa@perspectives.cc

7. © 2014 Perspectives GmbH Thank you! Perspectives GmbH University of Zurich Axel Michaelowa michaelowa@perspectives.cc axel.michaelowa@pw.uzh.ch