Reply by S. Kasim 2 Oct 2008

Dear All,

Re: item 3 in the latest UKCCSC News:

“Tullow plans to bury CO2” Independent (Sept 30)

“"We've looked at this from a corporate social responsibility view, but it's a £200m investment for us. It has to be viable in the long term and we'll probably end up making a reasonable return from it," Aidan Heavey, Tullow's chief executive said.”

Mark wondered  “if the return is dependant on winning the competition?”

My comment:

No, I don’t think that Tullow needs to win the competition to make the project viable.  Indeed, it’s my considered view that the sustainability of EU-ETS depends on this kind of project.  When reality dawns, and the EU-ETS is reformed (e.g. along the lines of mandating companies to return rather than sell extra EUAs), only market participants who have truly removed anthropogenic CO2 from the atmosphere (through sequestration) would have emission allowances to sell.  As a step in the right direction, provisioning for CCS in EU-ETS as from the Third Phase (2013) implies that every sequestered tonne of CO2 is a EUA that Tullow can sell.  With tightening emission rights limits, Tullow will be in business several times over.

Best wishes,

Sola