IVL Swedish Environmental Research Institute

Negative carbon dioxide (CO2)-emissions are prevalent in most global emissionspathways that meet the Paris temperature targets and are a critical component forreaching net-zero emissions in Year 2050. However, economic incentives supportingcommercialization and deployment of BioEnergy Carbon Capture and Storage (BECCS)are missing. This Policy and Practice Review discusses five different models for creatingincentives and financing for BECCS, using Sweden as an example: (1) governmentalguarantees for purchasing BECCS outcomes; (2) quota obligation on selected sectorsto acquire BECCS outcomes; (3) allowing BECCS credits to compensate for hard-toabate emissions within the EU ETS; (4) private entities for voluntary compensation; and(5) other states acting as buyers of BECCS outcomes to meet their mitigation targetsunder the Paris Agreement. We conclude that successful implementation of BECCSis likely to require a combination of several of the Policy Models, implemented in asequential manner.

The governmental guarantee model (Model 1) is likely to be requiredin the shorter term, so as to establish BECCS. Policy Models 2 and 3 may becomemore influential over time once BECCS has been established and accepted. Model 3links BECCS to a large carbon-pricing regime with opportunities for cost-effectivenessand expanded financing. We conclude that Policy Models 4 and 5 are associated withhigh levels of uncertainty regarding the timing and volume of negative emissions thatcan be expected—Thus, they are unlikely to trigger BECCS implementation in the shortterm, although may have roles in the longer term.

Based on this study, we recommendthat policymakers carefully consider a policy sequencing approach that is predictableand sustainable over time, for which further analyses are required. It is not obvioushow such sequencing can be arranged, as the capacities to implement the differentPolicy Models are vested in different organizations (national governments, EU, privatefirms). Furthermore, it is important that a BECCS policy is part of an integrated climatepolicy framework, in particular one that is in line with policies aimed at the mitigationof greenhouse gas (GHG) emissions and the creation of a circular economy. It willbe important to ensure that BECCS and the associated biomass resource are notoverexploited. A well-designed policy package should guarantee that BECCS is neitherused to postpone the reduction of fossil fuel-based emissions nor overused in the shortterm as a niche business for “greenwashing” while not addressing fossil fuel emissions.