Scheme for financing industrial CCS projects

These events have affected the scheme for financing industrial CCS projects – known as 45Q – which has now been proposed to be revised to provide increased flexibility, broader scope, a longer timeframe and – last but not least – more money. The new proposal involves payment of up to $85 per ton for CO₂ captured and stored from sources such as steel and cement and $120 for Direct Air Carbon Capture and Storage (DACCS) projects. In addition, Biden’s comprehensive infrastructure plan went a step further in July. This step provides space to support new CCS infrastructure. In July, there was also a positive development in political negotiations on the draft law (SCALE act) to legitimize support for the development of infrastructure projects for CCS. This is intended for projects that fall outside the 45Q scheme.

Development in CCS-related projects among industry players

Recently, there has also been notable development of CCS-related projects among industry players. In April, for example, ExxonMobil announced plans for a giga CCS project with a hub in Houston, Texas, with the ambition of upscaling to 100 Mt CO₂ stored per year by 2040. The concept will depend on public incentives, money and goodwill. More specific projects have also been announced, including projects related to LNG production and hydrogen in other industries.

Political roadmap for establishing CCS infrastructure in the United States

In July, another initiative was announced by the think tank Energy Futures Initiative (led by former Energy Minister Ernest Moniz), together with an association of trade unions, on a political roadmap for establishing CCS infrastructure in the US on a gigaton scale. In addition to the effect these measures will have on the climate the road map places great emphasis on the fact that these measures will also contribute to the preservation of jobs in industries that it is challenging to decarbonize. The media reports that the roadmap has been well received in and is being discussed in congress. Nevertheless, there are still political debates related to continued investment in fossil fuels that are taking place within the US government. Recently the US Special Envoy for Climate Change, John Kerry, reiterated the IEA’s message that we should not invest more in fossil fuel at the same time as the government approved such new projects.

This is part of the CCS Environmental Analysis for June and July 2021, prepared by Gassnova’s analysis team.
Read the whole analysis here.

CLIMIT funding has been crucial

CLIMIT has allocated funding for two projects called SWAP (Strategic Well Acquisition Project) and SWAP2, which is led by Equinor. The aim of the projects has been to collect additional data in two conventional exploration wells that can provide information about the area’s further potential for large-scale CO₂ storage. Now the results show that both wells it has become easy to dry. The wells thus indicates the potential for large-scale CO₂ storage. This has led to a rapid maturation of the bearings on Smeaheia, and now south of Northern Lights. – The support from CLIMIT in SWAP and SWAP2 has been crucial to realize both projects. The results will contribute to a more rapid scale-up of CO₂ storage on the Norwegian continental shelf, says project manager in Equinor Rune Thorsen.

Scaling up opportunities for storage operators

The areas can thus be used as possible back up-or upsizing solution for Northern Lights project, but also for other future storage operators on the Norwegian continental shelf. Access to data and early maturation of areas can be of great value with a view to realizing future projects for Norwegian oil and energy industry. For example, related to the various hydrogen-related initiatives are also proposed in Norway.

The collection of data provides significant savings and reduces uncertainty

Data collection reduces uncertainty to a critical part of the future value chain (CO₂ storage), providing significant savings by dropping a future dedicated verification well for CO₂ storage. The savings can be several hundred million norwegian kroner. The projects have provided an increased geological understanding of a strategically important area.

About the well in SWAP2

The well (31/1-1 S) in PL785S is located in the southern part of the Horda platform and covers the southernmost extent of the reservoirs on the Troll field. The well also revealed well-developed sandstones in the Johansen formation. This is the same reservoir that is planned to be used in the Northern Lights project, which is just north of PL785S. Well 31/1-1 S is approx. 5 km south of the boundary of the exploitation license EL001, and the well can therefore also contribute to de-risk large parts of the southernmost area in EL001. This is an area that can be very important if scaling up beyond the planned infrastructure capacity of Northern Lights, ie beyond 5 Mt / year. Read more about drilling on the Norwegian Petroleum Directorate’s pages.

Here you can read more about the SWAP and SWAP2 projects.

The visit took place in week 35, and was carried out in close and good cooperation with the industry actors in the Longship project, Northern Lights, Technology Center Mongstad and the Ministry of Energy.

– Must work to create acceptance

– For the Norwegian energy sector, Norwegian climate policy and our own transition to an emission-free society, the imminent parliamentary elections in Germany are almost as important as our own parliamentary elections. It is therefore crucial that we work purposefully to create acceptance, interest and understanding of Norwegian solutions such as CCS in Germany, says Council of Ministers at the Norwegian Embassy in Berlin Jon Hansen.

Gassnova’s environmental analysis for May addresses the growing political acceptance of CCUS in Germany (read the article here).

Hansen points out that Germany, as one of Norway’s most important partner in Europe, plays a key role in ensuring that Norwegian technology, Norwegian companies and Norwegian knowledge are part of the solution to Europe’s energy and climate challenges. – Therefore, this visit is very important, he points out.

A comprehensive program

The three-day visit had CCS dissemination and dialogue at the top of the agenda. The program started in Oslo, from there to Porsgrunn and then the Bergen area.

Oslo

• Guided tour at Fortum Oslo Varme (read their news item here) and presentation of their CCS project.
• Meeting at the Ministry of Energy where Secretary of State Tony Tiller had a welcome speech, together with Roy Vardheim, CEO of Gassnova.
• Secure storage, presented by Gassnova.
• The CCS work seen from Bellona, Zero, LO and NHO.

Porsgrunn

• Presentation of “Green conversion” at Herøya industrial park with presentations from Yara, Eramet Norway and Industrial Green Tech.

The Bergen area

• Guided tour at Technology Center Mongstad (TCM) and with Northern Lights at Øygarden.

Presented experiences from secure storage

– All the program were very interesting. This is the first time I get a practical demonstration of something I have only known in theory. Of course, much is still at the theory stage, but now I can better imagine how it will work in practice. It was very important to me. I was particularly noticed in the high acceptance of CCS here in Norway. Here, the government has done a great job of involving NGOs and others. It was also important to get an insight into the geological situation, and to confirm that we can assume, with the highest probability, that the deposits are completely tight and that CO₂ will not leak. This is still a point of criticism that plays a major role in Germany. I am now even stronger in the position I have had on this so far. When natural gas has not leaked in all these years, it can be assumed that the geological deposits are safe, says the politician Klaus-Peter Schulze from the party CDU/CSU.

– Germany must draw on the experiences from Norway

He continues to say that Germany do not have to reinvent the wheel, but draw on the experiences from Norway and find good solutions together. – I was really impressed with the technology center at Mongstad (TCM) that we visited, and the presentation of a green industrial park. Norway is a guide here. Cement production and waste incineration account for large CO₂ emissions each year. Many new waste incineration plants must be built in Germany in connection with the phasing out of the coal power plants (which previously took care of much of the waste incineration), and then one should consider whether to build carbon capture plants here from the beginning, Schulze concludes.

Representative from the German lime industry positive to CCS

For the industry, such as the lime industry, which emits CO₂ through the production of its products, this is currently the only way to become climate neutral, wrote Philip Nuyken, Head of Energy and Climate Policy at the Bundesverband der Deutschen Kalkindusteie e. V. on his LinkedIn profile after the delegation trip. He referred to the Langskip project, Heidelberg Materials, Northern Lights and Fortum Oslo Varme.

First part of CCS strategy: Transport and storage

The strategy facilitates both the export of Danish CO₂ to other countries and the possibility of a business importing foreign CO₂ to be stored on the Danish continental shelf. In June, the Danish Energy Agency also announced (link in Danish) a tendering competition for approximately DKK 200 million for the development and demonstration of technologies that would allow for CO₂ storage in the North Sea.

Second part of CCS strategy: CO₂ capture

The second part of the CCS strategy will deal with where the CO₂ will be captured from and will be announced later this year.

This is part of the CCS Environmental Analysis for June and July 2021, prepared by Gassnova’s analysis team.
Read the whole analysis here.

Hydrogen will make up half of their economy by 2030

Among industry leaders and experts currently involved in the production and/or use of hydrogen, 26% believe that hydrogen will make up half of their economy in 2030 compared to 2% today. The study also shows that there is reasonable agreement in the expectations of producers and users of hydrogen, and that investments made today are reasonably balanced between production and consumption in order to provide security for both parties.

Lack of investment is one of the biggest barriers

The study points out that the biggest barriers are the lack of investment in infrastructure for hydrogen, the high cost levels for hydrogen and a too slow implementation of regulations and carbon prices that provide the necessary investment signals to industry leaders and experts.

The study is based on a survey of 1124 people across multiple countries, industries and professions, as well as seven in-depth interviews with industry leaders.

DNV’s analysis: 85% of hydrogen used in 2030 will be from natural gas with CCS

Although the necessity of both blue and green hydrogen seems to be accepted by the majority of those who participated in the survey, these expectations are highly subjective and depend on the geographical areas in which they operate. DNV’s own analysis suggests that 85% of hydrogen used in 2030 will be from natural gas with CCS. The results from the study indicate a far more balanced expectation of the use of blue vs green hydrogen – including among the companies involved in the development of blue hydrogen.

This is part of the CCS Environmental Analysis for June and July 2021, prepared by Gassnova’s analysis team. Read the whole analysis here.

Will offer turnkey carbon capture plants for incinerators

Carbon Centric, which is a spin-off of Østfold Energi, will offer turnkey carbon capture plants for incineration plants that are both faster and cheaper than what has been possible so far. The company specializes in carbon capture plants for small and medium-sized combustion lines with emissions of between 10,000 and 100,000 tonnes of CO₂ per year. Now they will raise money to build a carbon capture plant at Østfold Energi’s waste incineration plant in Rakkestad.

Sharing knowledge and experiences

Østfold Energi has been involved in the CLIMIT demo-supported projects around the Øra cluster and BorgCO₂ from the start. Here is also FOV, which is part of the Langskip project to share its expertise and experience. The goal of the Langskip project is to pave the way for new CCS projects, so that the probability of achieving the goals in the Paris Agreement increases. Everyone involved in Langskip is obliged to share knowledge and experience beyond what is usual for an industrial project.

– We have learned a lot from this cluster collaboration, where we have looked at everything from various carbon capture technologies – to how to build a complete value chain within CCS, says Häger.

Collaborating with the supplier of the pilot to Fortum Oslo Varme

It is the Norwegian company KANFA that has developed the design Carbon Centric will now use. By using smaller and standardized dimensions, they believe that modular carbon capture plants can be produced almost as off-the-shelf. According to the press release, this means that incineration plants can cut their greenhouse gas emissions in a faster, cheaper and safer way.

It was KANFA who delivered the pilot to FOV, which was mainly financed by the full-scale project. They have also been central in the cost-reducing measures FOV has taken after the preliminary project «DG3».
The company was also involved in a CLIMIT demo project called Offshore CCS, which looked at the design of offshore CO₂ capture facilities. The project was led by the oil company OKEA.

Some of what has been suggested:

• The quota system (ETS) is, among other things, proposed to be expanded and strengthened
• The Innovation Fund will receive more funding and expand the sectors it supports
• All new cars will be emission-free from 2035.
• Higher taxes on fossil energy used in aviation and shipping, and requirements for the use of synthetic fuels in these sectors will be gradually increased.
• The scheme covering national responsibility for policies aimed at emissions outside the quota system (ESR – “Effort Sharing Regulation”) is, as expected, to be retained and strengthened.
The ESR covers about 60% of total emissions in the EU – including sectors such as agriculture, transport and construction. Waste incineration is still retained outside the ETS. The Commission has also announced proposals for changes in the gas market, but these will not be published until the end of the year.

Dissatisfaction with the proposal for a “customs tariff mechanism”

Much attention has been paid to the proposal for a tariff mechanism (CBAM – Carbon Border Adjustment Mechanism), which will prevent the import of industrial goods produced in countries with weaker climate regulations (carbon leakage). The scheme will be introduced gradually from 2023 to 2035 and will replace the current practice that has free quotas. The Commission has proposed that the scheme initially covers these sectors: iron and steel, cement, aluminum, fertilizers and power. Several countries outside the EU have expressed strong dissatisfaction with the scheme, and it is expected that the scheme will be the subject of extensive discussions in international forums, including the WTO, before it finds its final form.

Concern for residents of countries with weaker economies

It is estimated that before it is adopted, negotiations with the relevant nation states and within the European Parliament on the proposed package may take two years or more. Some reactions have already come in. Most of the concern is related to how the changes will affect the residents of countries with weaker economies and the inability to change their consumption patterns. The Commission has therefore placed special emphasis on a “social climate fund” to meet such challenges. This includes a framework of € 72 billion to be given to these countries from the EU’s own budget for the period 2025–32.

Climate concerns greatest in the northern and western parts of the EU

A recently published public survey by Eurobarometer shows that the Commission supports its priorities; for the first time, “climate change” is the single issue that the EU population ranks as humanity’s biggest challenge. Concerns about climate change are the greatest in the northern and western parts of the EU as well as in high-income groups. Concerns about the economy and access to water/food are the greatest in the southern and eastern parts of the EU.

This  is part of the Environmental Analysis for June and July, prepared by Gassnova’s analysis team.

 

The EU’s “Fit for 55” – how the EU will reduce greenhouse gas emissions by 55% by 2030

In July, the Commission launched a package of proposals on how to achieve recently adopted ambitious climate targets. The package contains proposals for new and changed regulations in several areas which, according to the commission, will “transform the economy and society fundamentally”.

Some of what has been suggested:

• The quota system (ETS) is, among other things, proposed to be expanded and strengthened
• The Innovation Fund will receive more funding and expand the sectors it supports
• All new cars will be emission-free from 2035.
• Higher taxes on fossil energy used in aviation and shipping, and requirements for the use of synthetic fuels in these sectors will be gradually increased.
• The scheme covering national responsibility for policies aimed at emissions outside the quota system (ESR – “Effort Sharing Regulation”) is, as expected, to be retained and strengthened.
The ESR covers about 60% of total emissions in the EU – including sectors such as agriculture, transport and construction. Waste incineration is still retained outside the ETS. The Commission has also announced proposals for changes in the gas market, but these will not be published until the end of the year.

Dissatisfaction with the proposal for a “customs tariff mechanism”

Much attention has been paid to the proposal for a tariff mechanism (CBAM – Carbon Border Adjustment Mechanism), which will prevent the import of industrial goods produced in countries with weaker climate regulations (carbon leakage). The scheme will be introduced gradually from 2023 to 2035 and will replace the current practice that has free quotas. The Commission has proposed that the scheme initially covers these sectors: iron and steel, cement, aluminum, fertilizers and power. Several countries outside the EU have expressed strong dissatisfaction with the scheme, and it is expected that the scheme will be the subject of extensive discussions in international forums, including the WTO, before it finds its final form.

Concern for residents of countries with weaker economies

It is estimated that before it is adopted, negotiations with the relevant nation states and within the European Parliament on the proposed package may take two years or more. Some reactions have already come in. Most of the concern is related to how the changes will affect the residents of countries with weaker economies and the inability to change their consumption patterns. The Commission has therefore placed special emphasis on a “social climate fund” to meet such challenges. This includes a framework of €72 billion to be given to these countries from the EU’s own budget for the period 2025–32.

Climate concerns greatest in the northern and western parts of the EU

A recently published public survey by Eurobarometer shows that the Commission supports its priorities; for the first time, “climate change” is the single issue that the EU population ranks as humanity’s biggest challenge. Concerns about climate change are the greatest in the northern and western parts of the EU as well as in high-income groups. Concerns about the economy and access to water/food are the greatest in the southern and eastern parts of the EU.

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DNV study on the prospects for a hydrogen economy: High expectations and significant barriers

In July, DNV published a study on the path to a global hydrogen economy. The study confirms significant expectations for a future hydrogen market.

Hydrogen will make up half of their economy by 2030

Among industry leaders and experts currently involved in the production and/or use of hydrogen, 26% believe that hydrogen will make up half of their economy in 2030 compared to 2% today. The study also shows that there is reasonable agreement in the expectations of producers and users of hydrogen, and that investments made today are reasonably balanced between production and consumption in order to provide security for both parties.

Lack of investment is one of the biggest barriers

The study points out that the biggest barriers are the lack of investment in infrastructure for hydrogen, the high cost levels for hydrogen and a too slow implementation of regulations and carbon prices that provide the necessary investment signals to industry leaders and experts.
The study is based on a survey of 1124 people across multiple countries, industries and professions, as well as seven in-depth interviews with industry leaders.

DNV’s analysis: 85% of hydrogen used in 2030 will be from natural gas with CCS

Although the necessity of both blue and green hydrogen seems to be accepted by the majority of those who participated in the survey, these expectations are highly subjective and depend on the geographical areas in which they operate. DNV’s own analysis suggests that 85% of hydrogen used in 2030 will be from natural gas with CCS. The results from the study indicate a far more balanced expectation of the use of blue vs green hydrogen – including among the companies involved in the development of blue hydrogen.

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The first part of the Danish government’s CCS strategy is ready – government wants to store CO₂ on the Danish continental shelf

In June, the government announced the first part of a new CCS strategy dealing with the transport and storage of CO₂.

First part of CCS strategy: Transport and storage

The strategy facilitates both the export of Danish CO₂ to other countries and the possibility of a business importing foreign CO₂ to be stored on the Danish continental shelf. In June, the Danish Energy Agency also announced a tendering competition for approximately DKK 200 million for the development and demonstration of technologies that would allow for CO₂ storage in the North Sea.

Second part of CCS strategy: CO₂ capture

The second part of the CCS strategy will deal with where the CO2 will be captured from and will be announced later this year.

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The US is trying to balance climate and economic considerations – CCS is getting more attention

Following the United States’ re-entry into the Paris Agreement and new, ambitious targets for net-zero by 2050, much has happened in the areas of energy and climate policy that may have an impact on the development of CCS in the United States.

Scheme for financing industrial CCS projects

These events have affected the scheme for financing industrial CCS projects – known as 45Q – which has now been proposed to be revised to provide increased flexibility, broader scope, a longer timeframe and – last but not least – more money. The new proposal involves payment of up to $85 per ton for CO₂ captured and stored from sources such as steel and cement and $120 for Direct Air Carbon Capture and Storage (DACCS) projects. In addition, Biden’s comprehensive infrastructure plan went a step further in July. This step provides space to support new CCS infrastructure. In July, there was also a positive development in political negotiations on the draft law (SCALE act) to legitimize support for the development of infrastructure projects for CCS. This is intended for projects that fall outside the 45Q scheme.

Development in CCS-related projects among industry players

Recently, there has also been notable development of CCS-related projects among industry players. In April, for example, ExxonMobil announced plans for a giga CCS project with a hub in Houston, Texas, with the ambition of upscaling to 100 Mt CO₂ stored per year by 2040. The concept will depend on public incentives, money and goodwill. More specific projects have also been announced, including projects related to LNG production and hydrogen in other industries.

Political roadmap for establishing CCS infrastructure in the United States

In July, another initiative was announced by the think tank Energy Futures Initiative (led by former Energy Minister Ernest Moniz), together with an association of trade unions, on a political roadmap for establishing CCS infrastructure in the US on a gigaton scale. In addition to the effect these measures will have on the climate the road map places great emphasis on the fact that these measures will also contribute to the preservation of jobs in industries that it is challenging to decarbonize. The media reports that the roadmap has been well received in and is being discussed in congress. Nevertheless, there are still political debates related to continued investment in fossil fuels that are taking place within the US government. Recently the US Special Envoy for Climate Change, John Kerry, reiterated the IEA’s message that we should not invest more in fossil fuel at the same time as the government approved such new projects.

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UK: Britons mostly positive about CCUS, but under certain conditions

The British Ministry of Industry (BEIS) published a study in July in which the public’s attitudes and views on CCUS were analyzed.

The organization of study

The study was carried out by an independent consulting company and was based on conversations with around 100 people who live close to industrial areas in the UK where such projects are being planned. The interviewees were led through four workshops over several weeks, where various aspects of CCUS were presented by selected experts and discussed in working sessions. The company drew their conclusions of the study after both quantitative and qualitative analysis of the conducted dialogue was carried out.

Result: Interviewees support the use of CCUS under some conditions

The findings from the study were that most of the interviewees supported the use of CCUS provided that the costs could be kept under control, that the benefits were in proportion to the costs and that the solutions could be considered safe for the environment. The interviewees also emphasized the possibilities that CCUS projects led to new jobs.

CCUS – difficult to understand

In general, many participants expressed that CCUS was complex and difficult to understand. This applied to an even greater extent to CCS together with bio-energy (BECCS), while Direct Air Carbon Capture and Storage (DACCS) as a concept was perceived as more understandable even though the technology was less well tested. Regarding hydrogen, the participants expressed greater concern about the use of hydrogen, rather than the way hydrogen was produced. A small proportion of the interviewees had objections to CCUS, and their attitudes did not change after being given more information. This was mainly not about CCUS per se, but rather because CCUS contributes to prolonged dependence on fossil energy.

The Environmental Analysis is prepared by Gassnova’s analysis team.

Dictionary for CCS

In the world of carbon capture and storage (CCS), there are many abbreviations and difficult words. We have tried to show these in the dictionary for CCS.

Open for input

CCS dictionary is by no means finished, so please send us suggestions for words and explanations you may know.