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Investors may drive carbon capture investment at plants, analyst says

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Investors may drive carbon capture investment at plants, analyst says

Managing the risk of climate change is going to become more important to get investors interested in coal plants in the future, according to an analyst.

"It's not that you have to believe in climate change, but as long as our clients do so, and as long as our investors are pushing us in this matter, we just have to do it," Thina Saltvedt, a chief analyst at Nordea Bank in Sweden, said at an Oct. 3 event at the National Press Club in Washington, D.C., organized by the Global CCS Institute on business opportunities in carbon capture and storage, or CCS, technology.

Saltvedt said the risk from climate impacts is not only something that can affect companies down the road, but right now, in the form of pressure from environmental groups, changing government policy and changes in consumer preferences. "All these kinds of changes can come really fast, and this is something that we have to take care of. Otherwise we could be hit pretty hard financially."

She said the risks associated with climate change might not only hit profits but might affect the access to bank loans and credit.

"If you have a climate footprint and we start to price the climate risk, that will have an impact on your credit risk rating," leading to more expensive financing or a lack of access to loans, Saltvedt said. Her bank is already incorporating climate risk in its business and investment operations.

She said that since solar and wind are not likely to overtake traditional fossil fuel energy sources in the near term, developing technologies for carbon capture, use and storage will become even more important for mitigating these risks.

Rich Powell, executive director of the ClearPath Foundation, which describes itself as a nonprofit with a mission to accelerate conservative clean energy solutions, said at the event that the focus should be to put carbon dioxide into the service of clean energy rather than pitting it against clean energy.

"The outcome we seek is a lower-carbon economy in the future," he said.

One thing that would help get investors interested is more transparency over the current price of carbon that oil companies interested in enhanced recovery are paying, for example. He believes that transparency on spot prices would give investors more faith in the development of carbon capture and use technology.

He thinks the Trump administration will do more in the future to further carbon capture and storage technology, as U.S. Secretary of Energy Rick Perry has been a proponent of pushing this technology forward.

"The proof will really be in the pudding in the FY 2019 budget proposal," he said.

Trude Sundset, CEO of Gassnova SF, the Norwegian state enterprise for CCS that manages a large-scale carbon capture and geological storage operation, said that for the cost of CCS to come down, technologies developed in scientific laboratories need to be tested on an industrial scale more often.

"In 15 years [CCS] will be normal operation for the industry. This is the way I see it," she said at the event.