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By Valerie Volcovici

WASHINGTON (Reuters) - At least 130 projects that capture and store carbon emissions at coal power and industrial plants must come online by 2020 if the world is to stay on course to keeping the rise in global temperatures below a threshold deemed dangerous by scientists, a new report released Wednesday said.

In its 2012 report on the global state of carbon capture and storage (CCS) deployment, the Global CCS Institute warned that reaching the 130-project goal from 16 in the works will be unlikely amid current investment levels and regulatory uncertainty.

The institute projected that only 51 of the 59 projects identified in its annual survey may be operational by then and some are unlikely to proceed.

"Since CCS is the only technology available for the decarbonization of industrial sectors such as iron, steel and cement manufacture, the risk of not being able to limit temperature rises to just 2°C becomes even greater," the report said, referring to the threshold.

The failure of many major governments to enact legislation to cap carbon emissions and make it more expensive for facilities to pollute undermines private sector investment in the expensive technology.

In the United States, where the two presidential candidates have touted the support for the coal industry, there has been little mention of investing in CCS because the boom in shale gas production from the fracking process has drastically lowered natural gas prices, driving greenhouse gas emissions to 20-year lows.

SLOW GROWTH

In the past year, the number of large-scale CCS projects globally has increased by just one to 75, according to the survey.

Eight projects were canceled since 2011, but nine new projects were identified, of which most will use the captured carbon to inject underground and recover oil or gas.

The United States leads the number of projects with 24 active and planned, followed by Europe with 21 and China with 11.

Projects to use carbon capture to recover oil dominates the projects in development in the United States and Canada.

CCS activity in China saw the biggest growth last year, with five of the nine new projects identified since 2011 located in the world's biggest greenhouse gas emitting country.

The report also shows some progress in early-stage CCS development in developing countries, where greenhouse gas emissions are expected to rise as they become more populated and industrialized.

Nineteen developing countries are engaged in CCS-related activities but in order to achieve global emission reduction targets deemed necessary by the International Energy Agency (IEA), 70 percent of CCS deployment will need to occur in non-OECD countries by 2050.

POLICY SUPPORT NEEDED

The report cited policy developments in the UK, the United Nations and China that have occurred since 2011 that will help deploy CCS on a wider scale.

In the UK, the government launched a comprehensive policy to push CCS beyond demonstration scale toward commercial scale through reform of the electricity market.

The United Nation's climate change body this summer allowed CCS to qualify as a carbon offset project under its Clean Development Mechanism, enabling developing countries to earn carbon credits for deploying the technology.

In China, CCS was included in China's 5-year plan that outlines policy priorities.

But the institute warned that these developments are not sufficient to play a role in reducing carbon emissions and preventing major temperature increases.

"Funding for CCS demonstration projects, while still considerable, is increasingly vulnerable and the level of funding support still available will service fewer projects than initially anticipated," the report said.

The institute warned that governments will need more than just carbon pricing legislation to stimulate CCS investment and should be disadvantaged to low-carbon technologies, such as renewables, which receive more subsidies and incentives.

"In order to achieve emission reductions in the most efficient and effective way, governments should ensure that CCS is not disadvantaged," the report said.

(Reporting By Valerie Volcovici; Editing by Richard Chang)

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