FormerXBC Inc XEBEQ

Carrot & Stick Approach Needed for Further Adoption

[ZouZS3]

In the absence of revenue drivers involving the secondary use of captured CO2, CCS on its own is a capital intensive investment with fragile returns that depend almost entirely on carbon prices and government policies. Thus, evolution of the private-public partnership model is essential for CCS adoption to blossom. In our minds, both carrotsin the form of incentivesand sticksin the form of sufficiently high carbon pricesneed to be in place. The requirement for large emitters to make large, multi-year investments in CO2 reduction will require long-term visibility on carbon levies and durability of government policies as elected leaders come and go.