In January 2021, we published the first report on the Carbon Takeback Obligation (CTBO). The Covid vaccination program had just begun and there were cautious hopes that better times were ahead. Oil and gas prices were low, and the expectation was that that would remain so. After all, in a world where renewable energy was getting cheaper and growing rapidly the demand for fossil energy would go down, supply would exceed demand and even the need for new projects was questioned (IEA Net Zero scenario2021).
Over a year later, we live in a completely different world. The combination of a faster-than-expected economic recovery, disrupted supply chains, low investment in oil and gas production, and the war in the Ukraine have led to huge price increases in energy, raw materials, and products. This is partly due to shortages, and partly due to the great uncertainties about future developments.
To become less dependent on Russia and to stabilize energy prices, many countries and companies are nevertheless preparing fossil energy projects again. But in the most recent IPCC report it is clearly stated that there is no more room (carbon budget) for new 'unabated' fossil infrastructure and projects. ‘Unabated' means: without CO2 capture and storage. The risk of 'lock-in' of fossil emissions is too great.
Firm policies to reduce the carbon footprint of fossil energy use if and as long as it is used have therefore become very urgent. Yes, efforts to reduce demand have to intensify urgently(efficiency, renewables, possibly nuclear), but then there will still be demand for fossil gas in the coming decades. The gas supply to meet that demand will have to increasingly be 'abated', and the new projects now underway as a result of the war will have to lead by example. Introduction of a Carbon Takeback Obligation is a very effective and efficient tool to achieve this. It places an obligation on producers to permanently store an increasing percentage of the produced fossil carbon, but it also provides the flexibility to achieve this collectively in the most efficient way possible. This means that not every project has to be 'abated', but that fossil gas use in total will have to have an increasingly lower net carbon footprint.
Our first report sets out the principles; this second report looks in more detail at how a CTBO for fossil gas can be implemented first in the Netherlands and later at the EU level. Among other things, it looks at the usefulness of Extended Producer Responsibility regulations (in the Netherlands), and at the economic impacts for various groups. Furthermore, significant efforts have been made to raise the profile ofCTBO internationally and to promote the recognition of the CTBO as an important additional policy instrument. This can be the basis for further international cooperation. The inclusion of producer responsibility, as in a CTBO, in the recently announced action plan of ElementNL (formerly NOGEPA) is a positive step forward in this regard. Other parties, too, are starting to get more and more behind the idea, sometimes hesitantly, sometimes more directly.
This second study was sponsored by Ministry of Economic Affairs & Climate change, ElementNL (formerly NOGEPA), EBN and BP. The work was carried out by De Gemeynt, Margriet Kuijper Consultancy and Royal HaskoningDHV.
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“The great thing about the CTBO is that it makes the CO2 emitters themselves responsible for cleaning up the pollution they cause. Of course the prevention of CO2 emissions should be paramount, and that can be taken into account in the design of a CTBO.”
Michelle Prins, Program Lead Industry, Nature & Environment
“The climate policy mix has over the past thirty years not led to a global peak in emissions. Fossil fuels, the primary cause of the problem, can still be produced without any regard of climate change. A CTBO puts the financial responsibility on the producer and thereby addresses the problem -literally- at the well. It is not a panacea, but it can, if well designed, make a difference in the climate policy mix.”
Heleen de Coninck, Professor socio-technical innovation and climate change,Eindhoven University of Technology
"Two years ago BP has set a goal to become net zero in 2050 and studies like this sharpen our thinking on effective ways to reach that goal"
Karen de Lathouder, CEO bp Netherlands
“For all fossil energy companies it is essential to move towards a zero climate impact as fast as possible.Introducing a CTBO scheme would help the sector as a whole to realize that objective.”
Jan Willem van Hoogstraten, CEO EBN
“Natural gas produced in the Netherlands has a very low carbon footprint, and ElementNL members (formerly NOGEPA) are working hard to reduce this even further. A CTBO would enable also scope 3 emission reductions. That is why ElementNL supports research and development of this policy instrument.”
Arendo Schreurs, Director ElementNL