03/18/2010 05:12 am ET | Updated May 25, 2011

Carbon Management: A Call to Action for the U.S. and China

As President Obama prepares to set foot
on Chinese soil for the first time today, the United States and China,
the globe's leading greenhouse gas producers, are engaged in a classic
standoff over climate change. The United States wants to see China agree
to cap its accelerating level of carbon emissions before it acts. China
wants the U.S. to lead by example on climate change and share technology
and expertise to help reduce the costs of its efforts, and minimize
any impact on its growth agenda. Although many nations are taking action
on climate change, meaningful global impact will be impossible without
collaboration from the U.S. and China in advance of the United Nations
Climate Change Conference in December.

One critical path for the two nations
to pursue is carbon capture and sequestration (CCS). CCS is a process
that captures greenhouse gas emissions from industrial processes before
they enter the atmosphere and stores them permanently underground. CCS
technology has the potential to mitigate emissions from coal-fired power
plants and help nations to achieve the reductions in global greenhouse
gases that energy efficiency, conservation and renewable energies are
unlikely (or unable) to meet on their own. This technology has significantly
advanced over the past decade, and components have proven commercially
successful in projects around the world.

Why should the U.S. and China form an
unprecedented partnership to collaborate on this technology now? Both
countries continue to rely heavily on coal for power generation (2030
projections are 50% and 73% for the U.S. and China, respectively). And
while renewable energy sources are projected to rise in the next two
decades (almost doubling in the U.S. and more than tripling in China),
they will only provide a fraction of the power coal provides. Without
a major change in global energy policies and practices that directly
address coal, worldwide CO2 emissions are projected to increase by 39 percent from
2006 to 2030
And a U.S.-China partnership would help China reduce costs of abatement,
while building American expertise and positioning the U.S. as a leader
in a new job-rich carbon management industry.

To take advantage of this, the U.S. and
China must overcome considerable technological, financial, and regulatory
hurdles facing widespread commercial CCS expansion. A new report I co-authored
last week with leaders of the Asia Society and Center for American Progress, "A Roadmap for U.S.-China
Collaboration on Carbon Capture and Sequestration,"
identifies a feasible, three-pronged approach
which the U.S. and China could follow to achieve such an outcome.

Sequester the pure CO2

streams on existing commercial coal-fired industrial plants in China.
Today, commercial scale sequestration is almost exclusively deployed
around enhanced oil recovery - pumping CO2 into mature
oil wells to improve production. To meet global CO2 emissions
objectives, broader geological storage options must be made economically
viable. China has installed more than 100 industrial coal gasifiers
that produce, as a byproduct, pure streams of CO2 that are
vented directly into the atmosphere. Emissions from these gasifier plants
are more straightforward and less costly to capture than emissions from
combustion plants.

Invest in research and development
to retrofit older power plants.

Because existing coal-fired plants must be either shut down or retrofitted
for CCS to reduce or eliminate their CO2 emissions, the U.S.
and China should identify plants in both countries for large-scale retrofit
demonstrations. These projects would help develop and test new capture
technologies to improve effectiveness and lower costs. To support these
efforts, the countries should open a joint R&D center for CCS technologies,
a move which already has the support of the U.S. Energy Department, which just granted $44 million
to projects to develop CCS technology

Catalyze markets for CCS.
The U.S. and China will have to provide financial incentives for private
capital to invest in carbon capture and sequestration projects. The
U.S. should consider developing government-backed public finance structures,
such as risk insurance or guarantees of CO2 prices for a
set amount of successfully abated carbon similar to those proposed by
the American Clean Energy and Security Act of 2009.

All of these moves will take time and
effort. They also represent a first-generation approach to dealing with
carbon-emitting power and industrial plants. But the plants are not
going away anytime soon. We must break the cycle of inertia and start
the process of driving down the cost of compliance that stands in the
way of progress toward climate objectives. The U.S. and China have the
motivation to act now. And as environmental scientists and citizens
around the globe watch, the clock is ticking.

Scott Daniels leads the global chemicals-energy
and sustainability practices at Monitor Group