Financing Innovative Low-Carbon Iron

and Steel Technologies in Asia

David Elzinga

Sr. Energy Specialist

Asia Development Bank

Asian Steel Experts’ Dialogue

23-24 May, 2018

Shanghai, PRC

Overview

Established to foster economic growth and cooperation in Asia Pacific region, and to contribute to economic development of its developing member countries

• Asian Development Bank (ADB) is NOT a commercial

bank

• Multilateral Development Bank (MDB)

– Provide loans for projects in developing member countries

– ADB gives grants or combined loans/grants to poorest member

countries

• Knowledge institution

• Sovereign and non-Sovereign lending

What is the Asian Development Bank?

– Developing the regulatory environment

– Preparing, planning and packaging projects

– Introduction of improved technologies to achieve quality infrastructure

– Support and advice during implementation

– Market-based and concessional financing of investments

– Credit enhancements & equity investments to share risks with private sector

– Development of financial markets and innovative financing modalities

– Environmental and social safeguards

ADB’s Role in Infrastructure Development

• In 2016, ADB lending reached a new record level of $17.45 billion

• Transport and energy continued to be ADB’s two largest sectors of operation, accounting for nearly 50% of ADB lending

ADB lending for transport and energy

Energy $4,506 (26%)

Transport $4,086 (23%)

Water $1,525

ICT $77

Finance Sector Development

$2,019

Education $771

Agriculture $1,257

Health $341

Industry $894

Public Sector Management

$1,985

($ million)

ADB’s Lending Sectors

– Aims to help DMCs improve energy access and security and

transition to low carbon economies through co-financing of

cost effective investments in technologies that result in

greenhouse gas mitigation

– Resources also finance policy, regulatory, and institutional

reforms that encourage clean energy (CE)/carbon capture and

storage (CCS) development

– Financing Partners: Australia, Canada, Japan, Norway, Spain,

Sweden, United Kingdom, and Global CCS Institute

– Total amount of $275.5 million has been remitted to ADB

Clean Energy Financing Partnership Facility

• ADB’s CCS Fund was established in 2009

• Supported by the UK Government and the Global CCS Institute, Australia

– Initial allocation of A$21.5 million

– Subsequent allocation of £ 37 million

• Utilization: Regional studies, country studies, knowledge sharing activities, centers of excellence, project feasibility studies, and investment grant for 1-2 pilots.

• Remaining funds: approx. $30 million

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CCS FUND UNDER CLEAN ENERGY FINANCING PARTNERSHIP

Year Title

2008 Carbon Dioxide Capture and Storage (CCS) Demonstration -Strategic Analysis and Capacity

Strengthening

2009 Carbon Dioxide Capture and Storage (CCS) Demonstration in Developing Countries—

Analysis of Key Issues and Barriers

2010 Determining the Potential for Carbon Capture and Storage (CCS) in Southeast Asia

2011 Study on Carbon Capture and Storage on Natural Gas-Based Power Plants

2012 Road Map for CCS Demonstration and Deployment (formerly Oxy-fuel Combustion Carbon

Capture for Power Plants and Carbon Captured Storage Demonstration and Deployment

Roadmap)

2013 Planning a Pilot Carbon Capture and Storage Activity

2013 Tianjin Integrated Gasification Combined Cycle Power Plant -additional financing

2013 Determining the Potential for Carbon Capture and Storage in Pakistan

2014 Promoting Carbon Capture and Storage in the People's Republic of China and Indonesia

2017 Promoting and Scaling Up Carbon Capture and Storage Demonstration (PRC)

2017 Promoting Carbon Capture and Storage in the People's Republic of China and Indonesia :

Additional Financing

ADB Supported CCS Project (Partial)

Country Partner

United Kingdom Department for Business, Energy and Industrial Strategy as donors to CCS Fund

Australia Global Carbon Capture and Storage Institute as donor to CCS Fund

Canada International CCS Knowledge Centre, Canada as knowledge partner

People’s Republic of China

Shanghai Jio Tong University, Guangdong Energy Development Institute, Northwest University

Indonesia LEMIGAS and Institute of Technology Bandung in Indonesia as knowledge

Japan JICA on CCS development through Gundih Project

ADB is also closely working with the experts from International Energy Association, Lawrence Livermore National Laboratory US, University of Sheffield, UK etc.

ADB’s Partners in CCS Promotion

Knowledge Products

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• ADB has offered a grant for People’s Republic of China and Indonesia

• The outcome of the TA grant would be:

• Institutional capacity for researching and demonstrating CCS

• Enhanced capacity in the areas of CCS technology

• Structuring of financial mechanisms for CCS commercialization

• Extended Phase will

• Provide additional support to COE activities

• Have greater geographical spread of activities to other developing

countries like Bangladesh,

• Spurt collaborations within and across the region with wider

coverage including EOR, Industrial CCS and CCUS

TA 8714 Promoting Carbon Capture and Storage

in the People's Republic of China and Indonesia

• Preparation of a report to find feasibility of EGR through CO2 in Bangladesh (July 2018)

• Deep Dive Workshop on CCS promotion during Asia Clean Energy Forum – Manila (June 2018)

• A collaborative study on decarbonization of Gas sector

• Study on ‘CCS readiness’ in the power and industrial sector

• Next phase will be more on CCUS project implementation with an aim to use funds by 2021. Additional focus will be on CCU and industrial CCS

• Major projects under consideration Gundih pilot project in Indonesia (USD 17 million), Feasibility study for Yanchang Petrochemicals project (USD 5.5 million)

• Exploring possibilities in other countries like Vietnam, Kazakhstan, Pakistan, India, Bangladesh etc.

Upcoming Activities on CCS

• Co-Funding of projects

• Joint Exercise to identify new CCUS opportunities in Asia

– Technology

– Business models

• Assistance to the countries in Legal and Regulatory framework formulation

• Awareness building in Asia through conferences and knowledge products

• Technology transfer and faster propagation of new technologies

Opportunities for Collaboration

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• CCUS

• Utilization will be key in the near term to develop economic models

• Developing countries not interested in storage only options.

• CCUS-Ready is a near term option for countries to “future-proof” energy system

infrastructure

• CCUS in power sector

• Important, but remains very challenging.

• Other low carbon options growing rapidly

• New construction of fossil based power is slowing or at risk of significantly lower

operating hours or changing operating conditions

• CCUS in industrial sectors

• Remains an essential technology for long term regional de-carbonization

• Steel and cement sector are initial areas of interest

Current View of CCUS by ADB

Thank You

delzinga@adb.org