Oct. 13 (Bloomberg) -- Businesses and governments need to invest at least $2.4 trillion by 2050 to capture carbon-dioxide emissions from power plants and factories and pump them underground, the International Energy Agency said.

That much is required to develop 3,400 projects globally that trap and store the greenhouse gas and help cut emissions from fossil fuels by half from 2005 levels, according to the IEA’s “road map” for carbon capture that was published today.

“The next decade is a litmus test: It’s a make-or-break period,” Tom Kerr, author of the IEA report, said in an interview in London. The world risks “irreversible change in the natural environment” without emissions cuts, the IEA has said.

The appeal carries weight because the Paris-based agency is the main energy-policy adviser to 28 oil-consuming countries including the U.S. and Japan. Founded in 1974 in response to the Arab oil embargo to advise nations on energy security, the IEA is increasingly urging steps to counter global warming, which scientists blame largely on emissions of heat-trapping gases.

The technology has been touted by U.S. Energy Secretary Steven Chu and U.K. Energy and Climate Change Secretary Ed Miliband as key to fighting climate change. The Group of Eight nations aims to announce 20 large-scale demonstration projects by next year to commercialize the technology by 2020.

The report was published at a London meeting that brought together 15 ministers from six continents to discuss progress in developing the carbon-capture technology, known as CCS.

‘Ambitious, Achievable’

The IEA said $2.4 trillion to $3.4 trillion is needed in the years leading up to 2050 for carbon-capture devices. That’s about 6 percent of the total investment necessary to slash gas emissions 50 percent from 2005 levels, according to the report. Other tools include nuclear power, renewables, and measures to improve energy efficiency, it said.

Miliband said the IEA’s plans are “ambitious” and “achievable” though governments need to broker a global treaty to fight climate change in Copenhagen in December that includes a financing mechanism to help spread carbon-capture technology between countries.

“It’s a big part of our energy plans and it’s got to be a big part of the world’s energy plans,” Miliband said in a London interview. “This meeting today illustrates that both developed and developing countries are determined that it is.”

Nobuo Tanaka, IEA’s executive director, said the next decade will mark a “make-or-break” period for the technology because it needs to be commercialized quickly to ensure the 2050 targets are met.

Cement, Steel

“We will need 100 large-scale projects by 2020, 850 by 2030 and 3,400 by 2050,” Tanaka told the meeting. “OECD countries must lead in the first decade but the technology must very quickly expand to the developing world, where the vast bulk of emissions growth will take place.”

Kerr said the 100 large-scale projects must each trap at least a million tons of CO2 per year and that the technology must be spread beyond power generators.

“It’s not just a clean coal-power technology,” Kerr said. “More than half of the CO2 stored in 2050 comes from the industrial sectors. We’re talking about cement, pulp and paper, iron and steel, chemicals.”

At the demonstration stage, the technology costs as much as 90 euros ($133) to keep a metric ton of emissions from the atmosphere, according to the consulting firm McKinsey and Co.

‘Big Investment’

Companies developing capture systems in the U.S. include American Electric Power Co., the nation’s biggest producer of electricity from coal, and Duke Energy Corp. In Europe, Alstom SA, E.ON AG, RWE AG and Vattenfall AB are testing the devices.

The governments in the Paris-based Organization for Economic Co-operation and Development will need to spend a total of $3.5 billion to $4 billion a year from 2010 to 2020, today’s report said.

“We need to have big investment,” Kerr said.

Because of the costs, developed nations will have to lead in terms of demonstrating and piloting the projects, Kerr said. By 2050, 65 percent of the CO2 captured globally will come from developing nations that aren’t members of the OECD, he said.

South Africa Energy Minister Dipuo Peters said four of the G8’s 20 intended demonstration projects should be in developing nations. Her country intends to test carbon injection by 2016 and have a demonstration plant capable of storing 100,000 tons of CO2 a year by 2020. A commercial plant is planned by 2025, she said.

“It is very critical that the international community develops financial capacity to assist developing countries,” Peters told the London meeting. “South Africa is faced by more pressing challenges such as energy poverty.”

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net.

Last Updated: October 13, 2009 09:47 EDT