The Rotterdam Climate Initiative: Carbon, Capture & Solved?

The RCI focuses on the ambition to reduce the CO2 emissions in the Rotterdam area to 12 Mton in 2025, while ensuring and increasing economic growth. The 12 Mton is based on a 50 per cent reduction of 1990 emissions. To calculate the CO2 emissions the source or local attribution is chosen. This ambition is largely dependent on carbon capture and storage (CCS). The RCI aims at developing a CCS hub in the Rotterdam port to facilitate their demand for CCS and to serve the market. By serving the market the CCS hub can ensure and increase economic growth for the Rotterdam area. The weakest point in the RCI is the lack of development of CO2 capturing capacity. CO2 transport and storage are developed following the capturing of CO2. The storage fields currently developed will not last very long after 2025, but there are enough other storage locations available. The capturing of CO2 is the real problem. Only the ROAD project will be realised in time, leading to a realistic forecast of 3.25 Mton annual capturing capacity. In the most optimistic scenario the current developed projects lead to a maximum capturing capacity of 5.75 Mton annually. For the RCI goal of 17.5 Mton CO2 should be captured and stored on a yearly bases. The importation of CO2, displayed in some RCI studies, does not fulfil the need of local attribution and therefore should not be part of the calculation. The low prices on the CO2 allowances market, the EU ETS market, make the marginal benefits of CO2 emission mitigation low. The marginal benefits of CO2 emission mitigation would reflect the marginal costs of CO2 emissions for society in an optimal market situation. Although there is little consensus among scholars on the costs of CO2 emissions, literature shows that these costs are substantial. The discount rate is of large influence on these costs. Although the choice is arbitrary this thesis and some recent papers show that a low discount rate is economically and morally desirable. This would make the costs of CO2 emissions much higher than the costs of CO2 mitigation options. This thesis concludes that the RCI will almost certainly fail to fulfil its ambitions in terms of CO2 emissions. On the other hand the potential for CCS in Rotterdam will become much bigger after successful demonstration projects like ROAD. They will show the possibility and create infrastructure where other, future, projects can benefit from. When, or if, the CO2 emissions prices then are set at a level reflecting the marginal societal costs by international politics the port of Rotterdam can reap the benefits of the RCI. As is felt by the author and RCI: Carbon, Capture & Solved? ii the interviewees and is reflected by literature doing nothing is far more expensive than investing now to solve the problem.