Decarbonisation Technology – August 2021

Challenges Chile will heavily rely on negative emissions by forests to reach its net-zero target, expecting carbon sinks to contribute as much as 50% to the emissions reduction required to reach the 2050 neutrality goal. This can pose a significant risk, given the high chances of carbon loss through deforestation, natural disturbance, forest wildfires and eventual competition for land. There is no ‘assured target’. Trees that store away CO 2 for 20 or 30 years before being burned in a wildfire provide a fundamentally different service to a tonne of the gas buried deep underground for thousands of years. Climate change is a problem of cumulative amounts of GHGs in the atmosphere, and many experts argue that the longer a tonne of CO₂ can be stored away, the more valuable it should be. So reliance on forest CO 2 capture would not be incompatible with the use of CCUS. CCUS is considered a mature CHILE 2018 REGIONAL DISTRIBUTION EMISSION INVENTORY

Antofagasta Region 17.801 kt CO2 eq. 20%

Valparaíso- Metropolitan Region 34.328 kt CO2 eq. 39%

Bio Bio Región 11.906 kt CO2 eq. 14%

Figure 4 GHG emissions by region

Source: Ministry of Environment

technology and infrastructure already existent (+40 years on), and has been the subject of much discussion and considerable research, but little in the way of real-world impact. This reveals an important point: the deployment of CCUS technologies is almost exclusively motivated by the need to significantly reduce GHG emissions, so their large-scale adoption depends on explicit efforts to control such emissions. However, as the early achievement of net-zero ambitions ramps up, that could change dramatically. The current economics of CCUS is such that the cost of emitting CO 2 from coal- or gas-fired power plants or industrial facilities is still less than the cost of implementing CCUS almost anywhere in the world today. However, excluding CCUS from the suite of technologies used to meet emissions reduction targets will increase these costs. Chile became the first country in South America to implement and collect a carbon tax, levying US$5/tCO 2 e for large industrial and power

generation sources. While many critics of the policy argue that US$5/tCO 2 e is not enough to significantly alter behaviour and foster a transition to sustainable energy sources, the phased implementation of carbon tax schemes is recommended to allay fears of decreasing competitiveness. They are also an incentive for several low-cost applications of CCUS, such as in oil refining and gas processing, which are near cost-effective to deploy today, even with relatively modest prices on CO 2 emissions. Another significant barrier to the effective deployment of CCUS is the current lack of recognised standards and guidelines to support its implementation. It is also important to acknowledge that in addition to a sufficiently stringent climate policy, the deployment of CCUS as part of society’s response to climate change will need a more clearly defined regulatory framework. Research has demonstrated that presenting a comprehensive awareness and education